USD/JPY retreats to 144.00 ahead of the US-China trade talks

• US Dollar loses momentum as the enthusiasm from the US NFP report wanes.
• The market's focus is on the US-China trade negotiations in London.
• The Safe-haven Yen trims losses favoured by a more cautious market mood.

The Yen is drawing some support from the retreating US Treasury yields and a softer US Dollar on Monday. The market has already digested the upbeat US Nonfarm Payrolls data seen on Friday, and investors are turning cautious about holding large USD longs, with all eyes on the US-China trade talks.

Representatives from the world's two largest economies will meet in London later today, aiming to ease the trade rift and bring their relationship back to the point it was after the Geneva negotiations that led to a sharp reduction of their reciprocal tariffs.

All eyes are on the US-China trade negotiations

US President Trump boosted market expectations over the weekend, with a tweet showing his confidence that the negotiations will go "very well". This represents a radical shift in tone from last week's comments complaining that reaching deals with Chinese President Xi was extremely difficult.

The pair advanced to nearly two-week highs on Friday after May's US Nonfarm Payrolls revealed that the US economy created more jobs than expected, 139K against the 130K market forecasts. These figures have eased concerns about a recession and tackled speculation about further Fed rate cuts, at least until September.

The calendar is thin today and tomorrow. The highlight of the week will be Wednesday's US CPI release, which will show further insight into the inflationary effects of the tariff turmoil. These figures could help to determine the Fed's monetary policy decisions and set the US Dollar's near-term direction.

Market optimism, however, has eased, with investors growing cautious ahead of the US ADP Employment report, which is expected to show a significant increase in payrolls in May, and the ISM Services PMI, which is also expected to have improved in May.