Japan’s trade negotiator, Akazawa, is reported to be planning another visit to Washington this week. The ongoing trade discussions between the US and Japan are yet to reach a conclusion.

After last week’s visit, Akazawa mentioned there was “progress”, though details were not shared. Japan maintains its position on wanting tariffs to be removed.

Current State Of Negotiations

No definitive breakthroughs have been achieved in the negotiations. There are 31 days remaining for a resolution to be found.

That Akazawa is travelling again to Washington so soon after his previous visit suggests momentum has not been lost. His remark last week about “progress”, even though lacking detail, implies that the conversations behind closed doors are moving past early formalities and into specific concessions or points of friction. Though nothing has yet materialised as a concrete agreement, the short turnaround for his return signals that both sides are under pressure, likely internally as well as diplomatically, to find common ground quickly.

From our perspective, this kind of diplomatic activity tends to exert a quiet but measurable influence on expectations for both currency and trade-related instruments. When we observe bilateral trade talks proceeding without resolution—but also not collapsing—the market often defaults into a steady range, reflecting reduced exposure to tail risks but uncertainty over timing. The 31-day window for resolution introduces a short-term boundary on possible outcomes. It effectively becomes an unofficial deadline, and markets tend to take such informal clocks seriously if both governments continue acting on them.

Market Implications

For us, the key is not whether tariffs are removed, but when participants believe they might be. Delays beyond that window can result in positioning changes, particularly in yen-forward curves and auto-sector linked contracts. As derivative traders, our role becomes one of filtering the signal from the diplomatic noise. In the short term, time decay on options related to Japan exports could favour strategies with theta collection, while low realised volatility provides an opening for structuring spreads that rely less on direction and more on implied dispersion.

Given these patterns, the near-term path rewards modest directional bias paired with controlled leverage. There isn’t enough information yet to justify aggressive repricing, particularly with macro data out of Tokyo remaining tepid and US economic prints continuing to run above average. Trade discussions, in this context, tend to play a second tier role, unless accompanied by official communiqués or policy shifts.

In the immediate days ahead, the approach isn’t to guess headline outcomes, but to assume continued ambiguity with short bursts of clarity. This lends itself well to calendar-based strategies, especially for those tracking correlations between trade-sensitive sectors and base currency pairs. As always in these transnational negotiations, what is not said publicly is often more instructive than official releases.

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