The divisions that we highlighted yesterday have continued overnight, with emerging market currencies pushing ahead, with the Aussie also firmer and making new highs for the year. This at a time when equities have stalled in the wake of the US jobs market report last week. We have also seen some marginal reversal in the recent strength of the safe haven currencies, more specifically the yen and Swissie. So what is this telling us about global risk appetite? The answer perhaps lies more with sentiment in stocks, where greater nervousness regarding upcoming earnings appears to be in place, together with less appetite for new issues into the market at stretched valuations, which means that the divergence between sentiment in stocks and FX could well remain in place for the time being. As for overnight specifics, the Aussie was the main mover, further boosted by domestic data showing stronger gains in home loans than anticipated, with the Aussie stalling just below the 0.94 level against the dollar.
We are likely to see a strong focus on the Fed minutes this evening. Recall that it was comments from the Fed Chair Yellen last month that unnerved markets as she was a little more precise in her comments that markets are used to from Fed speakers back in mid-March. The minutes to the March meeting will be scoured for more detailed signs of what the Fed is now pinning rate hikes upon. The dollar has now reversed most of the gain seen since that time, helped yesterday by the stronger tone to both the euro and also sterling in the wake of the latest production numbers.
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