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Yen May Rise on Weaker Risk Appetite, US Dollar Falls Before FOMC

Yen May Rise on Weaker Risk Appetite, US Dollar Falls Before FOMC

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • NZ Dollar down as risk appetite sours in Asian trade
  • US Dollar pressured ahead of FOMC policy decision
  • Yen may rise as market sentiment continues to sour

The New Zealand Dollar underperformed in otherwise quiet overnight trade. The decline played out alongside a drop in Japan’s benchmark Nikkei 225 stock index as well as S&P 500 futures, pointing to fading risk appetite as the source of pressure on the sentiment-geared currency.

The US Dollar likewise suffered, pulling back after touching a three-week high last week, as the focus turns to a much-anticipated FOMC monetary policy announcement. Markets are all but certain that a rate hike is in the cards but the accompanying forecast update and commentary may stoke significant volatility.

Looking ahead, a lull in top-tier economic news flow seems likely to keep sentiment trends in the spotlight. Futures tracking major European and US equity benchmarks are broadly in the red, hinting that higher-yielding FX is vulnerable while the anti-risk Japanese Yen may build some upward momentum.

Retail traders expected US Dollar strength. Find out here what that hints about the price trend!

Asia Session

Yen May Rise on Weaker Risk Appetite, US Dollar Falls Before FOMC

European Session

Yen May Rise on Weaker Risk Appetite, US Dollar Falls Before FOMC

** All times listed in GMT. See the full DailyFX economic calendar here.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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