Forex Market Review (Asian Session) – Safe-havens pull back as US seeks peace with N.Korea; dollar steady ahead of FOMC

Forex Market Review (Asian Session) – Safe-havens pull back as US seeks peace with N.Korea; dollar steady ahead of FOMC

On Monday, safe-haven currencies were trading lower as UN leaders were preparing to kick off a meeting on Tuesday to discuss possible solutions on North Korea’s nuclear programs, with the US seeking a peaceful resolution. The dollar was hovering sideways ahead of the FOMC meeting.

With the economic calendar lacking significant releases during the Asian session, the dollar index was mainly flat at 91.88 as investors were waiting for the two-day FOMC meeting ending on Wednesday. Although investors anticipate Fed policymakers to keep rates unchanged, they will be focused to hear whether the Fed will start shrinking its $4.4 trillion balance sheet.

Attention will be also paid to Trump’s speech at the UN General Assembly on Tuesday, where leaders from all over the world will gather to discuss options on how to discourage North Korea’s threatening nuclear programs. The US Secretary of State, Rex Tillerson, said that the US seeks for a peaceful resolution but if efforts fail to deter North Korea’s nuclear actions, then the country will use its military options.

The safe-haven currencies moved lower on the above news, with dollar/swissie climbing by 0.20% to 0.9611, while dollar/yen peaked at an eight-week high of 111.39 after the Japanese Prime Minister, Shinzo Abe, called for a snap election probably in the next two months.

According to government sources, Abe is considering calling elections in mid-October or after Trump’s visit in November to take advantage of his party’s leading position against the opposition party. Recent ratings showed that the ruling party attracted 50% of voters polled following Abe’s response on North Korea’s missile tests as well as conflicts observed within the opposition party.

Besides that, market watchers will keep a close eye on the BOJ policy meeting on Thursday, where expectations are for the central bank to maintain its ultra-easy monetary policy.

The pound slipped to $1.3570 after it touched a one-year high of $1.3615 on Friday. This arose after the BOE Monetary Policy Committee (MPC) member, Gertjan Vlieghe, clarified that the central bank should raise rates “as early as in the coming months”.

Euro/dollar changed hands at 1.1937 ahead of the Eurozone’s final inflation readings for August later today.

The aussie and the kiwi gained against the greenback as investors were looking for riskier assets. The aussie jumped by 0.16% to $0.8015, while the kiwi was up by 0.21% at $0.7300, hitting a one-month high of $0.7342 earlier in the session.

Regarding commodities, oil prices were in an uptrend during the Asian trading, with WTI crude rising by 0.52% to $50.15 per barrel and Brent being 0.13% higher at $55.69.  This came after the OPEC report signalled increasing demand in 2018 and the number of US drilling rigs for new production reported last week fell.

Gold was weaker by 0.30% at $1,315.90 per ounce amid lower risk-off sentiment.

Source: Trade Forex with XM.

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