Risk sentiment improved yesterday after three central banks surprised markets with aggressive cuts, enhancing speculation that the Fed may indeed ease more than it hinted last week. Besides the RBNZ, which delivered a “double cut” during the Asian morning yesterday, the RBI cut by 35bps instead of 25bps, which was the consensus, while the BOT delivered a quarter-point cut at a time when expectations were for no action.
Stock Indices Recover on Surprisingly Aggressive Cuts
The dollar traded mixed against the other G10 currencies on Wednesday and during the Asian morning Thursday. It gained against SEK, NOK and JPY in that order, while it underperformed against AUD, NZD and CAD, with Aussie and Kiwi being the standouts. The greenback traded virtually unchanged against EUR, GBP and CHF.
The rebound in the commodity-linked currencies, combined with safe havens' soft performance suggests that risk appetite improved yesterday. Indeed, most major EU indices broke...
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