 Last week proved to be a whirlwind for global markets, marked by a series of shocking events—from the failed assassination attempt on Donald Trump last weekend, to the historic global tech outage that occurred on Friday that brought significant attention but surprisingly little reaction from the financial markets. Still, after a volatile week for stocks, questions are raised about whether the observed shift in risk sentiment is a temporary blip or the beginning of a more prolonged sluggish corrective phase that could color the upcoming months. In the currency markets, the reaction was also pronounced, reflecting a clear picture of investor unease. Commodity currencies bore the brunt of this nervousness, with Kiwi leading the decline, followed by Aussie and then Loonie. Admittedly, Kiwi's slide is particularly linked to anticipations of an earlier-than-expected rate cut by RBNZ, while Loonie is being pressured by another looming rate cut from BoC. Yet's Aussie's weakness across the board suggests that these currencies are significantly impacted by the prevailing risk-off mood. Conversely, traditional safe-haven currencies like the Swiss Franc, Japanese Yen, and Dollar emerged as top performers, benefiting from the surge in risk aversion. Notably, Dollar managed a turnaround even amid strong market consensus around two impending Fed rate cuts this year, highlighting its dual role as a safe-haven asset and a currency influenced by domestic monetary policy expectations. Euro and Sterling, meanwhile, ended in the middle of currency performance rankings. |
