Yen leads as equities sentiment remains sour
Trading ranges have expanded decently in the last hour as markets come alive but the yen remains the leader of the major currencies bloc as Asian equities continue to stay soft after disappointing Chinese economic data. E-minis are also trading 0.9% lower at the moment and that is fueling further gains in the yen as well.
Meanwhile, the likes of the euro, loonie and pound are mainly capitalising on the dollar's weakness to start the session. There aren't any fresh headlines to drive the greenback lower but the market narrative is that the focus will start shifting towards a more dovish Fed and that isn't going to help provide much tailwind for the dollar to start the year.
At the other end of the spectrum, risk trades are the ones struggling with the aussie and kiwi staying on the back foot. Although, both currencies have recovered from off their lows against the dollar. They're both weighed lower after being hit by a double whammy from poor Chinese data in Asian trading (direct trade correlation and poorer risk sentiment).
Looking at the session ahead, risk is expected to stay a little sour with European equities also to follow the negative mood in stocks so far today. That will keep the yen underpinned but look out for changes in US equity futures to gauge the mood.
Aside from that, expect markets to grow more worried about the dollar as we kick things off in 2019 with the prospects of a dovish Fed, weaker economic data, political gridlock leading to less likelihood of fiscal stimulus, government shutdown still continuing, and the trade war with China drags on.
