Forex Today: Risk-sensitive FX recovers from lows, tracking ferocious intra-day Wall Street rebound By Frank_Macro DollarIndex RiskAppetite RiskAversion
Markets were hit by a wave of risk aversion on Monday, benefitting the safe-havens and hurting the risk-sensitive currencies, though the latter group had pared back on much of their earlier underperformance by the end of US trade asrecovered. Market commentators said that geopolitical concerns about the rising risk of a new Russian/Ukrainian military conflict and equity investor worries about Fed tightening were the main drivers of the broadly downbeat tone on Monday.
The hardest risk-sensitive currencies recovered in tandem. AUD/USD, which had dipped as low as the 0.7090s where it traded over 1.1% lower, recovered back to the 0.7140 area, down a comparatively modest 0.5% on the day. Coming up on Tuesday, Aussie traders will be watching key Q4 Consumer Price Inflation data that could, if hotter than expected, bolster hawkish RBA policy bets and further facilitate the rebound.
USD was the safe haven of choice and the top-performing G10 currency of the day, with the DXY rising about 0.3%, though in the end failing to hold above the 96.00 level as risk-appetite recovered later in the session. Nonetheless, it reached its highest point in two weeks, aided by hawkish Fed chatter/concerns, while much weaker than expected flash Services PMI data was shrugged off as a result of the temporary Omicron impact rather than any underlying economic weakness.holding above 1.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
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