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The kiwi is the big story of the day, with movements across other major currencies remaining lukewarm at the moment, as attention slowly turns to Fed President Powell’s speech later today, where he will talk about current economic problems.
The RBNZ was the main cause of the kiwi sinking at 0.6000 against the dollar, but the pair is now at a low around 0.6020.
Risk sentiment remains lukewarm, although we did see US futures contract about 0.5% lower earlier in Asia-Pacific trading to slightly higher by 0.2% today.
But as we saw yesterday, US-Chinese tensions are still stirring the pot and this could at least keep buyers back if things get worse along the way.
The 61.8 retracement level in the S&P 500 also held up fairly well this week.
In the future, the feeling of risk – or lack thereof – is likely to be the main driver of European trade before the market looks for clues from Powell later today.
Thereafter, the main risks will remain, but the question is still whether the recent risk rally finally encounters a key stumbling block this week. We will see.
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