In a CNBC interview late-Friday, the White House Trade Adviser Peter Navarro made the following key comments on the US-China trade conflict, China’s currency devaluation and Fed’s interest rate policy.

Bullish on US economy, stock market.

Serious structural issues with China.

Pres. Trump is taking a very strong stance with China.

China is clearly manipulating its currency.

Key for markets in the short-term is how fast Fed cuts rates.

Doesn’t want China to devalue the currency, but says ‘they will’.

Plan To have Chinese negotiators come to the US.

With the US still expecting the next round of China trade talks, the risk sentiment could get a slight lift in Monday’s Asian trading. But markets will continue weighing in the latest trade-negative comments from the US President Trump tweeted out on Friday.

The South Korean presidential office said in a statement on Saturday, North Korea fired two projectiles into the sea off its eastern coast (Hamhung area) in early hours, in its latest weapons launch following a series of missile tests in recent months, Reuters reports.

“The launch on Saturday morning was aimed at testing capabilities of North Korea’s new type of short-range missile it is developing on its own, as well as protesting South Korea-U.S. joint drills this month”, the statement read.

South Korea’s Joint Chiefs of Staff noted: “More missile launches are highly probable, as the North Korean military is conducting its own summer drills.”

In response to the missiles launch, a US official said, “We are aware of reports of a missile launch from North Korea, and we continue to monitor the situation. We are consulting closely with our Japanese and South Korean allies.”

The previous North Korean missiles launch reports had limited impact on the broad market sentiment. Therefore, the reports of the latest missiles fired could also fail to deter the risk sentiment, as the US-China trade tensions are likely to overshadow.

The USD/JPY pair slipped to fresh seven-month lows of 105.25 on Friday after the US President Trump’s comments on US-China trade dispute that sent the Treasry yields tumbling across the curve. The spot managed to recover a part of the decline to close near 105.70 region.

On late-Friday, the US-based Fitch Rating, in its latest credit review report, affirmed Italy's credit rating unchanged at BBB while maintaining a negative outlook.

Key Quotes:

“This week's political developments reinforce our assessment at the previous review that the government was unlikely to see out a full term and there is an increasing risk of an early election from the second half of this year.

There are downside risks to the fiscal outlook should a future government opt to disengage from EU fiscal rules and be more willing to risk financial market instability.”

Amid increased Italian political uncertainty and calls for a fresh election, as early as October, the shared currency stood resilient on Friday, with EUR/USD having managed to hold above the key 1.1177 support. The spot settled the week just a few pips shy of the 1.12 handle.

In the week ahead, the EUR/USD pair will remain at the mercy of the Italian political risks, as the German and Eurozone Preliminary GDP data will headline amid lingering US-China trade tensions.