Safe havens came under selling interest on Tuesday as global equity markets rebounded in a switch to “risk on” sentiment. In New Zealand, employment data came in better than anticipate, helping the Kiwi to recover some of recent lost ground against its US counterpart. Focus for NZD-traders now turns to the RBNZ monetary policy meeting.
The dollar traded lower against most of the other G10 currencies on Tuesday. The main gainers were NOK, SEK and NZD, while the losers were the “safe havens” JPY and CHF as global stock markets bounced following Monday’s bloodbath. Gold was down as well. The greenback traded virtually unchanged against the pound.
What began with rising bond yields evolved into a "bloodbath" across global markets on Monday. US equity markets were on the back foot last week and accelerated their slide on Friday after the US Jobs data showed wages accelerating by much more than anticipated. This spread fears of rising inflation faster than previously anticipated and thereby, faster rate increases by the Fed. With rising bond yields and fears of higher borrowing costs that could erode profitability for companies, investors abandoned the stock market and started to move in the alluring bond market.
Read the full financial markets daily report on JFD Research.