The Japanese yen could receive new support from US President Donald Trump's economic policy, which favours a weak dollar. One of the US President’s main objectives is to reduce the US trade deficit which rose by $20 billion to $720 billion dollars in 2017.
The Dollar will be front and center today ahead of the release of the US inflation and retail sales figures with traders eager to receive fresh data from the United States. This has been a very volatile week for the greenback that has seen strong losses mid-week, a correction on Wednesday and then another move to the downside over the past 24 hours.
Volatility in the currency markets remains elevated this week with strong moves seen across the major currencies very early in the new year. The Dollar has been among the most volatile instruments in the FX universe over the past few days and yesterday was a bit of a rollercoaster ride for the US currency. A news report coming from Bloomberg suggested that Chinese officials are contemplating whether to reduce or stop buying US Treasury bonds and naturally the Dollar took a dive as soon as traders received this report.
The Dollar continues to push higher at the beginning of the week with the US currency posting gains mainly against the Euro and the commodity currencies while also threatening to drive Cable below 1.35. The move was initially treated as a technical correction after 3 weeks of bearish performance from the greenback but yesterday a strong move in Treasury Notes was the main driver behind the price action with the 10-year yield breaking above 2.5% to reach its highest level in 9 months.