Talking Points:
- Yen falls, Aussie Dollar gains as market mood brightens in Asia
- US, European stock index futures hint risk-on mood to continue
- What will drive longer-term FX market trends? See our forecasts
The perennially anti-risk Japanese Yen declined and the sentiment-linked Australian Dollar moved broadly higher as the markets’ mood brightened at the start of the trading week. Most Asian stock exchanges posted gains after top US officials sought to cool worries about imminent hostilities between the US and North Korea following last week’s fiery rhetoric.
FTSE 100 and S&P 500 futures are pointing firmly higher, hinting that the chipper mood has scope to carry forward once European and North American markets come online. That seems likely to bode ill for the Yen as well as the similarly-minded Swiss Franc while higher-yielding commodity currencies outperform. The Euro may also rise as the prospect of tapering ECB QE puts it on the “risk-on” side of the spectrum.
With that said, another quiet day on the economic data front leaves the door open for stray headlines to drive seesaw volatility again. For example, it does not seem too far-fetched to imagine that another worrying sound-bite out of Washington DC can overtake the spotlight and pour cold water on nascent optimism, triggering a broad-based reversal across the spectrum of major asset classes.
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Asia Session
European Session
** 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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