Currency markets lingered in digestion mode in Asian trade as markets digested the aftermath of last week’s failure the AHCA healthcare reform measure in the US and its impact on the so-called “Trump trade”. The New Zealand Dollar narrowly underperformed as local bond yields declined, pointing to near-term deterioration in the RBNZ policy outlook.
Looking ahead, the absence of top tier economic data will probably put comments from UK Foreign Secretary Boris Johnson initially into focus. He is scheduled to answer questions in Parliament, with Brexit-related queries likely to predominate as the government prepares to formally begin divorce proceedings this week. A long negotiation is ahead but Mr Johnson may yet offer tidbits potent enough to move the Pound.
The spotlight then turns to Fed-speak. Comments from Fed Chair Janet Yellen will probably take top billing. Governor Jerome Powell as well as Kansas City and Dallas Fed Presidents Esther George and Robert Kaplan are also schedule to speak. Fiscal policy uncertainty is no less a problem for central bank officials than it is for markets however, so clear-cut guidance with lasting US Dollar follow-through seems unlikely.
On the sentiment front, futures tracking top European and US equity index benchmarks are pointing convincingly higher. This hints that the lull in big-ticket event risk may offer space for a corrective recovery in sentiment and the broader “Trump trade”. That probably bodes ill for the anti-risk Japanese Yen while the greenback edges higher, at least in the very near term.
Asia Session
European Session
** All times listed in GMT. See the full DailyFX economic calendar here.
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