Commodity currencies rises broadly in Asian session today, buoyed by slight improvement in risk sentiment after a relatively quiet weekend in the Middle East. This contrasted with the performance of typically safe-haven assets such as Swiss Franc, Japanese Yen, and Dollar, all of which traded mildly lower. Gold also dips away from 2400 mark, while WTI crude oil lingered around 82. Overall, the picture suggests relative calm in the markets for now.
The forex markets display a calm demeanor in the Asian session, with most major pairs and crosses gyrating in very tight ranges. Australian Dollar finds modest support from the state orchestrated rebound in Chinese Yuan. However, this lift hasn't translated into clear momentum for an extended rally in Aussie.
Yen falls broadly in Asian session today, influenced by the dovish sentiments expressed BoJ's Summary of Opinions of December meeting. The document indicated a lack of urgency among board members to tighten monetary policy, with a particular emphasis on the minimal risk associated with delaying the exit from negative interest rates. Conversely, the board expressed concerns about the potential risks of tightening too early. This cautious stance reflects the board's ongoing focus on the establishment of a "virtuous" cycle between wages and prices, a key prerequisite for any consideration of a rate hike. The spring wage negotiations are set to be a pivotal moment for the BoJ to evaluate the emergence of this cycle. Despite this dovish outlook, Yen's retreat in the forex market was notably restrained.
Amid the backdrop of surging treasury yields, Dollar has pressed on, extending its recent rally. The mounting sentiment of risk aversion has provided additional tailwinds for the greenback, especially after the DOW experienced its sharpest decline since March. For now, Yen emerges as the day's runner-up in strength, shadowed closely by Canadian Dollar. Conversely, Australian and New Zealand Dollars trail behind. Euro and Sterling are holding their ground in a muddled middle, their positions buffered to some extent by Swiss Franc's selloff.
On the currency front, major currency pairs and crosses are bounded within Friday's range for now, with the market awaiting the next move. Releases of PMI data from Eurozone and UK might trigger some volatility today. However, traders' primary focus will undeniably be the upcoming high-profile events - FOMC and ECB interest rate decisions - set to unfold later this week, along with several key economic data releases.