Yuan flat as investors await Trump, Yellen speeches this week

While many investors were hoping Trump would unveil details on pro-business policies including tax reform, cash repatriation or infrastructure spending during his address to Congress Tuesday night, others were not ready to make new bets as they anxious that the speech would disappoint. The dollar fell to a session low of 112.31. Despite the dollar weakening against most currencies ahead of Trump's speech, which investors will watch closely for fresh details on his economic plans, sterling was kept under pressure by worries about the fallout from Brexit. Against a basket of major currencies it was flat at 101.15.

USA 10-year Treasury notes were last down 7/32 in price to yield 2.342 percent, from a yield of 2.317 percent late Friday.

The dollar dropped 0.40 percent against the euro to $1.0603 and was little changed against the yen at 112.23 yen. Dallas Fed President Robert Kaplan said the United States central bank might need to raise interest rates in the near future to avoid falling behind the curve on inflation. The aussie rose versus its U.S. counterpart to reach 0.7690 after data showed that Australia posted its narrowest current account deficit since 2001 during the December quarter.

The global MSCI ACWI index .MIWD00000PUS was off 0.2 percent after rising more than 8 percent since Trump's November 8 election on expectations for a pro-business administration.

Trump met USA state governors at the White House on Monday and said he sees "big" infrastructure spending and is seeking a military spending hike of more than 9 per cent.

USA stocks slipped Tuesday afternoon as a disappointing profit outlook from Target dragged down retailers and as investors braced for President Donald Trump's address to Congress.

The Dow Jones Industrial Average .DJI fell 25.2 points, or 0.12 percent, to close at 20,812.24, breaking a 12-day run of record closing highs.

U.S. Treasury yields edged lower on Tuesday on month-end buying, while investors' wait-and-see approach ahead of an evening speech by U.S. President Donald Trump to the U.S. Congress limited the move.

U.S. Treasury yields will be the primary driver of the USD/JPY over the near-term so start preparing for a battle between what the market thinks and what the Fed thinks.

A wait-and-see mood prevailed in late Tokyo afternoon trading. It stood at 2.318 percent on Monday, not far from Friday's US close of 2.317 percent.

In contrast, the two-year Treasury yield, which is most sensitive to traders' view on Fed policy, was up over 3 basis points at 1.236 percent.

Putting pressure on US yields, economic data on Friday showed new home sales grew less than expected in January.

Spot gold turned down 0.4% to $1,251.3 an ounce, as its inability to hold above the 200-day moving average was a source of technical weakness.

  • Zachary Reyes