US Dollar, Yen May Rise as Trade War Worries Sour Market Mood

TALKING POINTS – US DOLLAR, EURO, YEN, TRADE WARS

• US Dollar may find support in haven flows after pullback in APAC trade
• Japanese Yen may rise as US, European bourses follow Asia downward
• Euro unlikely to find lasting directional lead from regional CPI revision

The US Dollar corrected cautiously lower against most of its major counterparts at the start of the trading week. The move tracked a pullback in Treasury bond yields. The overall move seemed to be corrective after the greenback rose with benchmark US lending rates against the backdrop of a hawkish shift in Fed policy bets on Friday, as expected.

Looking ahead, sentiment trends may emerge as the driver du jour for G10 FX. Sentiment soured in Asia Pacific trade amid renewed trade war worries. Futures tracking the FTSE 100 and S&P 500 equity benchmarks are trading lower before the opening bell in London and New York, hinting at more of the same ahead. That might revive haven support for USD as well as boost the perennially anti-risk Japanese Yen.

A revised set of Eurozone CPI statistics headlines an otherwise dull offering on the European data docket. The headline on-year inflation rate is expected to be adjusted slightly lower to 2 percent from the 2.1 percent reported in preliminary figures. The outcome seems unlikely to mean much for the Euro after the ECB signaled near-term policy is essentially on autopilot last week.

See our study on the history of trade wars to learn how it might influence financial markets!

ASIA PACIFIC TRADING SESSION

EUROPEAN TRADING SESSION

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

FX TRADING RESOURCES

• Just getting started? See our beginners’ guide for FX traders
• Having trouble with your strategy? Here’s the #1 mistake that traders make
• Join a free Q&A webinar and have your trading questions answered

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter