Yen Vulnerable to Deeper Losses as Market Mood Improves

Yen Vulnerable To Deeper Losses As Market Mood Improves

By Ilya Spivak of DailyFx

Tuesday, April 24, 2018 5:02 AM EDT

The anti-risk Yen suffered as risk appetite swelled in Asia Pacific trade, with bourses in Japan, Australia, and China posting confident gains. The New Zealand Dollar underperformed, however, sinking alongside local bond yields. The move speaks to ebbing RBNZ rate hike prospects but a clear-cut catalyst for the shift in baseline policy bets is not readily apparent. Tightening is not priced in until mid-2019.

Looking ahead, a tame European data docket seems unlikely to provide directional conviction. Germany’s IFO survey is perhaps the most eye-catching bit. The headline business confidence gauge is seen falling for the fifth consecutive month, underscoring some of reasoning behind the recent dovish shift in ECB policy bets. Euro follow-through ahead of the coming Governing Council meeting, however.

The US calendar is even sparser, which may leave sentiment trends to dictate the near-term trajectory. S&P 500 futures are pointing convincingly higher ahead of the opening bell on Wall Street, hinting that a “risk-on” mood may prevail. That bodes most obviously ill for the Japanese unit. Meanwhile, the US Dollar may continue to march higher, if for reason better than the absence of a substantive road-block.

ASIA PACIFIC TRADING SESSION

Yen Vulnerable to Deeper Losses as Market Mood Improves