Markets traded in a risk-off mode yesterday, with risk-linked currencies and equities coming under selling pressure, and safe havens strengthening. The first hit came after the European Commission downgraded Eurozone’s growth projections, while the second was news that US President Trump and China’s Xi Jinping are unlikely to meet before March 1st. In the UK, the BoE kept interest rates on hold and downgraded its growth projections. The pound slid initially, but was quick to recover and trade even higher, perhaps as officials kept the prospect of hiking on the table, even in case of a no-deal Brexit.
Risk Assets Slide, Safe Havens Gain on Growth and Trade Concerns
The dollar continued to drift north against most of the other G10 currencies, for the sixth straight day. It gained the most against NOK, SEK, CAD, and AUD in that order, while it slightly underperformed against JPY and GBP. The greenback traded virtually unchanged against CHF and NZD.
The strengthening of the safe havens and the weakening of the commodity-linked currencies suggest a risk-off trading activity. The exception was NZD, which strengthened instead of weakening. Perhaps this was due to some short-covering following the steep slide on...
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