The two traditional risk aversion homes in the currency market are the USD and the CHF, and with the SNB keeping a cap on the latter, it’s the USD which is benefitting most from the current bout of risk aversion. As Jamie mentions below, outflows out of Greek banks are a significant factor and it would be little wonder if similar outflows weren’t affecting Spanish, Portugese and Italian banks as well.
The USD is also charging ahead against emerging market currencies, with Latam currencies weakening against the greenback, in similar fashion to what we are seeing in USD/Asia. Yesterday we saw two central banks, India and Indonesia, intervening to slow the USD rise and there was also verbal intervention from the Bank of Korea. We can expect something similar again this session.
Good luck today.
