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Risk Aversion Returns, USD/CNH Off Highs After PBOC Fix

FOREX

The risk switch flicked to off again after the markets got some reprieve on Wednesday, albeit the initial round of defensive flows has lost momentum. The greenback leads gains as U.S. Tsys have cheapened across the curve, while e-mini futures operate in negative territory.

  • Safe havens JPY and CHF are the next best performers as participants shy away from riskier currencies. USD/JPY has added a handful of pips amid slight widening in U.S./Japan 10-year yield spread.
  • Spot USD/CNH returned below CNH7.1800 after the PBOC pushed its fixing error (in USD/CNY terms) back out to -729 pips. The reaction was limited overall, with the pair still trading more than 150 pips higher on the day.
  • Cable has gone offered amid apparent profit-taking in the wake of the BoE's intervention in bond markets on Wednesday, with concerns over the UK government's fiscal plans resurfacing.
  • On the global data docket we have U.S. initial jobless claims and third reading of Q2 GDP, German consumer inflation figures and Canadian GDP. Another hefty round of central bank rhetoric is inbound, with Fed, ECB, BoE and Riksbank members due to speak.
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The risk switch flicked to off again after the markets got some reprieve on Wednesday, albeit the initial round of defensive flows has lost momentum. The greenback leads gains as U.S. Tsys have cheapened across the curve, while e-mini futures operate in negative territory.

  • Safe havens JPY and CHF are the next best performers as participants shy away from riskier currencies. USD/JPY has added a handful of pips amid slight widening in U.S./Japan 10-year yield spread.
  • Spot USD/CNH returned below CNH7.1800 after the PBOC pushed its fixing error (in USD/CNY terms) back out to -729 pips. The reaction was limited overall, with the pair still trading more than 150 pips higher on the day.
  • Cable has gone offered amid apparent profit-taking in the wake of the BoE's intervention in bond markets on Wednesday, with concerns over the UK government's fiscal plans resurfacing.
  • On the global data docket we have U.S. initial jobless claims and third reading of Q2 GDP, German consumer inflation figures and Canadian GDP. Another hefty round of central bank rhetoric is inbound, with Fed, ECB, BoE and Riksbank members due to speak.