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Yen May Extend Rise on Trade War, US Shutdown, Brexit Uncertainty

TALKING POINTS – YEN, CHINA, VIACOM, TRADE WAR, SHUTDOWN, BREXIT

  • Yen gains, Aussie and NZ Dollars fall as Viacom signals China exit
  • Dour Chinese trade statistics add to evidence of trade war damage
  • Brexit uncertainty might compound risk-off mood ahead of key vote

The sentiment-geared Australian and New Zealand Dollars followed Asia Pacific stocks lower while the anti-risk Japanese Yen outperformed in a dour start to the global trading week. News that media giant Viacom might divest from China appeared to trigger the selloff.

As if that were not enough, December’s Chinese trade data offered further evidence that trade tensions between Washington and Beijing are hurting economic activity. Exports plunged 4.4 percent on year, marking the worst result in two years. Imports sank 7.6 percent, the largest drop since July 2016.

TRADE WAR, US SHUTDOWN, BREXIT UNCERTAINTY MENACE MARKETS

Looking ahead, a lull in top-tier economic news flow opens the door for risk-off dynamics to carry through to European and US trade. Indeed, the bellwether S&P 500 futures are pointing conspicuously lower. Evidence of continued deadlock in talks to end the US government shutdown may compound selling pressure.

Last-minute posturing ahead of Tuesday’s House of Commons vote on the UK government’s Brexit withdrawal bill might spur de-risking further. Prime Minister Theresa May will make a last-minute appeal for the plan, warning that its defeat could compromise withdrawal from the EU altogether.

See our market forecasts to learn what will drive currencies, commodities and stocks in Q1!

ASIA PACIFIC TRADING SESSION

EUROPEAN TRADING SESSION

Yen May Extend Rise on Trade War, US Shutdown, Brexit Uncertainty

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

FX TRADING RESOURCES

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

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

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