FX Action: Risk-on positioning has been channelled

FX Action: Risk-on positioning has been channelled through the purchasing of dollar bloc currencies and the shorting of the Japanese yen. The likes of the South African rand and Mexican peso are also showing strong gains. Out of the main currencies, AUD-JPY and NZD-JPY are showing the biggest magnitude of movement on the day, with both up 2.6% at prevailing levels, which are slightly off the highs. The dollar and European currencies are essentially trading as a bloc, holding comparatively steady against one another while gaining quite strongly on the yen simultaneouly losing ground to the commodity-correlating currencies. USD-JPY is up by 1.9%, while EUR-JPY and GBP-JPY are showing a similar degree of movement. The dollar, euro and pound are all concurrently showing about a 0.5% decline versus the Australian dollar, for instance. While the U.S. currency is adhering to its proclivity for being an inverse correlate of risk appetite in global markets, which has been strong this year, the European currencies are being viewed with wariness given the relatively tight Covid restrictions across the region, to which market participants are expecting to find expression in central bank policy intentions.