Forex Today: Yen crosses bid despite G7 debacle, trade fears may hurt USD

Omkar Godbole FXStreet Contributor

The FX markets showed uncanny resilience to heightened trade tensions in Asia. The US President Donald Trump’s decision to abruptly withdraw his support for a Group of Seven (G7) communique and the attack on his Canadian counterpart Justin Trudeau did put a bid under the anti-risk JPY in Early Asia. But, the risk sentiment unexpectedly stabilized, lifting the Yen cross higher.

For instance, USD/JPY rose from 109.28 to 109.83. Also, AUD/JPY - the risk barometer, rose from 82.95 to 83.56, signaling risk reset. Further, the equities also picked up a bid. Nikkei, Hang Seng, and NIfty posted gains, while S&P/ASX 200 and Shanghai Composite reported moderate losses.

Key news in Asia

The US could struggle to re-isolate North Korea as Kim turns to China for help with the economic transformation

As reported by Reuters, US President Trump may have a tough time re-isolating North Korea if the upcoming Trump-Kim summit takes a turn.

Germany's Merkel: US support withdrawal from G7 communique is sobering

German Chancellor Angela Merkel called Trump's decision to withdraw support from G7 communique sobering and bit depressing and reiterated readiness to implement tit-for-tat tariffs.

Trump tweets: "We protect Europe and then get unfairly clobbered on trade"

President Trump singled out German regarding NATO Payments and stressed the need to correct US-Europe trade imbalances.

Key focus ahead

The West is in a crisis of sorts after Trump pulled support for a G7 communique that called for a fair and balanced trade. So, the response from the European and US stock markets to the developments over the weekend will likely guide the FX markets. The Yen crosses may rise further if the European and US stocks report gains.

Also, heightened trade tensions may complicate matters for the Fed, so, the greenback could run into offers. But, the ECB and other major central banks are not immune to trade tensions either. Hence, the losses in the greenback will likely be moderate.

Amid the trade worries, the UK Office for National Statistics (ONS) is scheduled to release UK manufacturing data. An above-forecast reading could strengthen the bid tone around GBP.

Majors

EUR/USD: Corrective rally stalls on weak data, conflicting signals on the charts

GBP/USD remains familiar with 1.34 as impending rate hike, Brexit developments freeze traders

USD/JPY makes a run for 110.00 as risk appetite swings back into the Monday markets

USD/CAD fades spike to 1.30

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD revisits 1.3530; Dollar pushes harder

GBP/USD adds to the weekly correction and recedes toward the 1.3530 zone on Friday. Indeed, Cable faces increasing selling pressure on the back of extra gains in the Greenback, particularly fuelled by Chair Warsh’s speech at the Jackson Hole Symposium and the US NFP Annual Revision (-79K).

EUR/USD breaches below 1.1600, multi-day lows

EUR/USD now accelerates its decline and retreats to seven-day troughs in the sub-1.1600 region at the end of the week. The pair’s pullback comes on the back of the strong rebound in the US Dollar after Chair Warsh delivered a hawkish message in Jackson Hole, while the US NFP Annual Revision came in at -79K.

Gold challenges its 200-day SMA near $4,530

Gold’s decline gathers fresh steam, hitting weekly lows while disputing its critical 200-day SMA near $4,530 per troy ounce. The yellow metal’s increasing weakness comes in response to the generalised upbeat tone in the US Dollar and the widespread rebound in US Treasury yields, as investors continue to reprice a Fed rate hike in September.

Crypto Today: Bitcoin, Ethereum, XRP rally loses steam despite steady ETF inflows

Bitcoin is back below $80,000 at the time of writing on Friday, after a second attempt at breaking resistance between $81,000 and $82,000. Meanwhile, Ethereum and Ripple mirror Bitcoin’s cooling trend, with ETH sliding to $2,500 and XRP falling toward $1.40 support.

Week ahead – RBNZ and BoC decide on rates ahead of all-important US NFP

Dollar rebounds ahead of ISM PMI and NFP data. RBNZ is expected to raise rates; focus to fall on forward guidance. BoC is set to remain on hold; will it raise rates in 2027?

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.