Japan’s trade negotiator, Akazawa, is scheduled to visit Washington again this week. The trade talks between the US and Japan are still ongoing and haven’t reached a conclusion. After his last visit, Akazawa noted there was “progress,” although specifics were not provided. Japan is still pushing for the removal of tariffs. No major breakthroughs have happened in the discussions so far. There are only 31 days left to find a resolution. Akazawa’s quick return to Washington suggests that momentum hasn’t been lost. His hint at “progress,” despite lacking details, indicates that talks are moving beyond just formalities to address specific issues. Although a solid agreement hasn’t emerged yet, his fast return shows both sides are feeling pressure—both internally and diplomatically—to quickly find common ground. In our view, such diplomatic efforts can subtly affect expectations for currency and trade-related instruments. When trade talks are ongoing with no resolution but also not falling apart, the market tends to stabilize, reflecting limited risks but uncertainty about timing. The 31-day timeline sets an informal deadline, which markets often take seriously if both governments keep moving forward. What matters most is not just whether tariffs will be lifted, but when people believe they might be. Delays beyond this timeframe can alter market positions, especially in yen-forward curves and contracts linked to the auto sector. As derivative traders, we sift through the diplomatic noise for clear signals. In the short term, declining value on options related to Japan exports could favor strategies that benefit from collecting theta, while low volatility offers chances to create spreads with less reliance on market direction. Based on these trends, a measured directional approach combined with controlled leverage seems beneficial for the near term. There isn’t enough information yet to warrant drastic changes, especially since economic data from Tokyo remains weak while US economic reports are above average. In this context, trade discussions are secondary unless they come with official announcements or policy changes. In the coming days, our strategy isn’t to predict specific headlines but to expect ongoing uncertainty with occasional moments of clarity. This is ideal for calendar-based strategies, especially for those monitoring connections between trade-sensitive sectors and key currency pairs. As always in international negotiations, what goes unsaid can often be more revealing than official statements.

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