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Risk Aversion Materialises

FOREX

Lingering geopolitical tensions inspired a degree of risk aversion overnight, amid the absence of headlines that would affect broader sentiment. JPY led gains in the G10 basket, while AUD brought up the rear, with a BBG trader source flagging AUD/JPY sales by Japanese exporters and AUD/USD selling by funds.

  • The greenback fared well, outperforming most of its G10 peers, but the DXY failed to take out the prior trading day's peak. Fed Chair Powell said that the economy is at an "inflection point" and is "about to start growing much more quickly," but warned against the principal risk of a renewed spread of Covid-19.
  • The PBoC set its central USD/CNY mid-point at CNY6.5578, virtually matching sell-side estimates. USD/CNH hovered above neutral levels ahead of this week's Chinese data deluge.
  • Today's economic docket is rather uninspiring, with EZ retail sales and comments from ECB's Panetta & de Cos, Fed's Rosengren, BoE's Tenreyro & Riksbank's Ohlsson providing the main highlights.

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