Ishiba encourages Bessent to continue trade discussions, emphasizing important political issues after their meetings
by VT Markets
/
Jul 18, 2025
Japan’s trade negotiator, Ryosei Akazawa, talked with US Treasury Secretary Bessent about important political topics.
Ishiba requested that Bessent continue discussions on energy trade. Their meeting in Tokyo will be followed by a trip to Osaka over the weekend.
The Status of Trade Talks
No real progress has been made during their recent discussions.
Akazawa’s update shows that there’s still a deadlock between Japan and the US. Ishiba’s call for continued talks indicates that a breakthrough isn’t likely soon. This uncertainty may keep markets unsettled and let traders hold on to their assets related to these negotiations.
As a result, the USD/JPY currency pair will probably remain in a tight range, which could frustrate traders looking for a big price movement. The pair has been hovering near 34-year highs, trading between 155 and 160. Japanese officials have repeatedly warned that they may step in to support their currency. We believe that trading strategies, like selling options strangles outside this range, might be beneficial.
Implications for Currency and Equity Markets
For equity derivatives, we’re focusing on the Nikkei 225 index, which responds closely to currency shifts. The ongoing weakness of the yen, caused by the standstill in trade policies, historically helps Japan’s big export companies to see higher profits. This trend helped the index hit a record high above 40,000 earlier this year, suggesting that call options on the index could be a good investment.
We expect implied volatility to increase as traders factor in the political risks from the stalled negotiations. The trip to Osaka this weekend may trigger a significant price movement if there’s any surprising news, or if the deadlock is confirmed again. This situation makes it appealing to take long volatility positions, like buying straddles, to capitalize on the uncertainty.
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by VT Markets
Jul 18, 2025
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