TALKING POINTS – YEN, G20, TRUMP, US DOLLAR, STOCKS
Yen gains amid risk aversion after inconclusive G20 summit
US Dollar lower as APAC markets digest Trump jawboning
Stock index futures hint risk-off mood likely to carry forward
The anti-risk Japanese Yen outperformed in Asia Pacific trade as most regional markets traded lower following a disappointing G20 summit in Argentina over the weekend. The gathering of finance ministers and central bank governors highlighted a familiar list of grievances – from swelling trade war tensions to building financial pressure on emerging markets – but offered no clear path toward their resolution.
Background - A Brief History of Trade Wars, 1900-Present
The US Dollar continued to edge lower as Asia Pacific markets took their turn to onboard two days of jawboning from President Trump. He talked down Fed interest rate hikes and said a stronger currency puts the US at a disadvantage. When those remarks sparked outrage the President doubled down, accusing China and the EU of manipulating FX rates and stoking concerns about competitive devaluation.
Looking ahead, a bland offering of economic data may keep sentiment trends at the forefront. Futures tracking key European bourses are pointing decidedly lower, hinting the risk-off mood is likely to persist. Continued Yen strength seems like the most obvious implication of such an outcome. Follow-though may prove lacking however as traders look ahead to potent event risk later in the week.
ASIA PACIFIC TRADING SESSION