Calm summer markets and a “presidential” statement from Trump on Afghanistan allowed USD/JPY to rise. Without any issues, there is less demand for the safe-haven yen. This was enough to send USD/JPY from the lows of 108.60 to 109.80.

And then Trump returned to his own self. In a campaign-style speech in Phoenix, the President threatened to shut down the government if Congress doesn’t fund the wall that Trump wants to build on the Mexican border. Last year, Trump said that Mexico will fund the wall. In addition, Trump blamed Democrats for not funding the wall even though Republicans control the government.

The wall seemed to be off the agenda, but the threat of a government shutdown is something that can worry markets. Shutting down the government and/or defaulting on government debt could have severe consequences.

To add insult to injury, Trump also talked about canceling NAFTA “at some point”. This isn’t a preferable outcome from the current renegotiation of the trade treaty.

USD/JPY got a reminder that things aren’t that smooth and turned back down. The pair is now back to the middle of the range, around 109.40. Support awaits at 108.60, the recent low. Resistance is at 109.85.