Yen May Continue to Fall as Market Sentiment Brightens
- Japanese Yen falls as Asian markets follow Wall Street higher
- US Dollar reluctant to build on gains before Yellen testimony
- British Pound gains with UK Gilt yields at trading week open
The Japanese Yen underperformed in otherwise muted Asian trade, dropping as most regional stock exchanges followed Friday’s Wall Street lead upward. That undermined the appeal of the standby anti-risk currency. The British Pound edged higher as UK Gilt rates jumped higher at the weekly trading open, boosting the yield appeal of GBP-denominated assets.
Looking ahead, an uneventful offering of European and US economic data is likely to put sentiment trends at the forefront. Most European bourses have picked up where the risk-on drive left off overnight and S&P 500 futures are pointing higher, arguing for more of the same when North America comes online. This bodes most obviously ill for the Yen, arguing for deeper losses as the day progresses.
The US Dollar might have gained considering investors’ chipper mood seems to follow on from last week’s White House hint of an imminent tax cut announcement. The greenback is proceeding cautiously however as markets look ahead to on-coming testimony from Fed Chair Janet Yellen, leery of committing to a directional bias until she offers an update (albeit an indirect one) on the central bank’s expected tightening path.
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** 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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