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Yen May Extend Gains as Market Mood Sours on Irma, North Korea

Yen May Extend Gains as Market Mood Sours on Irma, North Korea

Talking Points:

The Japanese Yen outperformed as stocks tumbled across Asia Pacific exchanges, offering a familiar lift to the perennially anti-risk currency. On the other side of the spectrum, the sentiment-sensitive Canadian, Australian and New Zealand Dollars dutifully declined.

A negative lead from Wall Street seemed to set the tone. Traders’ return from Labor Day closures translated into losses as markets weighed up North Korea’s latest nuclear weapon test and looming Hurricane Irma. The storm is menacing the US just as post-Harvey recovery gets underway.

A dull offering on the European economic data docket may keep sentiment trends in the driver’s seat. Futures tracking the benchmark FTSE 100 index are pointing decidedly lower ahead of the opening bell in London, hinting that the risk-off mood is likely to carry onward.

Later in the day, the service-sector ISM gauge and the Fed’s Beige Book survey of regional economic conditions are due to cross the wires. Outcomes echoing broad improvement in US data outcomes since mid-June may offer a lifeline to the beleaguered US Dollar.

The greenback suffered its largest drop in over a week yesterday as risk aversion and dovish comments from Fed officials weighed against interest rate hike prospects. The priced-in probability of another increase before year-end is now 26 percent, down from 33.2 percent on the prior day.

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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

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