Citi: Tariff deadline may be'irrelevant 'for G10 FX, but keep an eye on Japan

Citi FX strategists believe that for the most part, the upcoming July 9 deadline for tariff talks is likely to be a "non-event" for G10 FX. On the European Union side, Citi's base case is that the two sides will reach a framework agreement by July 9, when the 10 per cent tariff rate will be extended and negotiations will continue. "Given the recent strength of the euro, they are speculating that such news will be slightly positive for the euro, but not necessarily a significant driver as a lot of the good news is already reflected in the price of the euro." On Japan, Citi believes that the chances of a deal are declining given Mr. Trump's recent comments. "Japan appears to be at the highest risk of tariff increases," Citi said. The bank expects the US and Japan to climb to 150 this summer before falling below 140 later this year as the Japanese yen resumes strength in anticipation of the Bank of Japan's policy normalization.