Yen Eases as Stock Gains Warm Risk Sentiment, Brexit Talks Eyed

  • Pound falls as U.K. begins Brexit talks with EU in Brussels
  • Kiwi dollar rallies after performance services in May rose

May Under Pressure as Brexit Talks Begin

The yen edged lower against all its major peers as Asian stocks gained on improving risk appetite while the pound fell before the start of Brexit negotiations.

Resilience in Japanese stocks helped currency markets brush aside a fall in ratings for Prime Minister Shinzo Abe’s cabinet. New Zealand’s currency rallied on demand from leveraged accounts after the performance services index for May rose. All regional benchmark stock indexes rallied with the Nikkei 225 Stock Average up 0.6 percent while the Hang Seng Index gained 1 percent.

“With stocks on an uptrend for quite some time, and the global economy seen to keep expanding, the general risk positive sentiment is continuing,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities Co. in Tokyo. “In that regard, the yen is bound to come under selling pressure.”

The pound fell as Brexit talks begin Monday amid confusion over what the U.K. government wants from the separation. The euro held steady after Emmanuel Macron’s year-old political movement won a large majority in the French parliament Sunday.

  • USD/JPY up 0.1% at 111.00, rising as high as 111.14
    • The Fed is expected to raise rates again later this year to create a buffer while Trump’s economic policies are expected by year-end as the Republicans must realize the risk of losing in mid-term elections if there is no stimulus: Yamamoto
  • USD/JPY driven by short-term money and lacks direction, says Naohiro Nomoto, manager of FX trading at Bank of Tokyo-Mitsubishi UFJ
    • Expects pair in 109-112 range with 0.50 yen overshoot blip up or down
  • EUR/USD little changed at $1.1199
    • French President Macron’s year-old political movement swept aside established parties, giving the new president a mandate to push through changes for the French economy, according to pollsters’ projections
  • GBP/USD falls 0.1% to 1.2769
    • Britain begins Brexit talks with EU at 11am in Brussels on Monday
    • Police say there are a number of casualties after a van collides with pedestrians in London
  • NZD/USD rises 0.5% to 0.7292
    • Kiwi rises initially on tier-two data releases and then on macro selling of AUD/NZD, according to an Asia-based FX trader
    • Leveraged accounts had already bought spot intraday in view of improved local data, trader says
    • N.Z. May performance services index up at 58.8 from revised 53.2 in April; Westpac 2Q consumer confidence index rises to 113.4 from 111.9

— With assistance by Daisuke Sakai

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