TALKING POINTS – G7, TRUMP, KIM, EURO, ECB, YEN, AUSTRALIAN DOLLAR

  • Yen lower, Aussie and NZ Dollars higher before Trump/Kim summit
  • Canadian Dollar down following tumultuous gathering of G7 leaders
  • Euro up before ECB meeting expected to bring QE strategy update

Currencies anchored to market sentiment reflected a cautiously optimistic mood across Asia Pacific bourses at the start of the week. Hopes for rapprochement at tomorrow’s meeting between US President Trump and North Korean leader Kim Jong Un in Singapore likely drove the move. The anti-risk Japanese Yen traded lower while on the opposite end of the spectrum, the Australian and New Zealand Dollars rose.

The Canadian Dollar suffered after a tumultuous G7 leaders’ summit in Quebec ended with US President Donald Trump withdrawing support for a joint post-meeting communique and attacking via Twitter the gathering’s host, Prime Minister Justin Trudeau. Traders likely interpreted the spat as a threat to successful renegotiation of the NAFTA trade agreement.

Meanwhile, the Euro traded higher against all of its major counterparts in anticipation of the upcoming ECB monetary policy announcement. It is expected to update officials’ strategy on the €30 billion/month in QE asset purchases currently due to expire in September. The baseline view seems to envision a gradual tapering of uptake that winds down stimulus expansion by year-end.

Looking ahead, a modest offering of second-tier economic data offers little that might take investors’ attention away from the Trump/Kim conference or other heavy-duty event risk set to cross the wires later in the week. That includes the aforementioned ECB meeting as well a policy decision from the Fed’s rate-setting FOMC committee. In the meantime, consolidation might prevail.

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ASIA PACIFIC TRADING SESSION

Asia Pacific Trading Session Economic Calendar

EUROPEAN TRADING SESSION

Yen Down as Markets Turn Hopeful Eye to Kim, Trump Summit

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

FX TRADING RESOURCES

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

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