Swiss Franc and Dollar Stay Firm as Market Risk Eases
The wave of risk aversion that rattled foreign exchange markets in Asia on Wednesday eased by the European morning, with safe-haven demand softening. The Japanese yen erased earlier gains, while Antipodean currencies such as the Australian and New Zealand dollars edged higher.
The Swiss franc remained strong, and the U.S. dollar held firm after touching its highest level since April 1 in late Tuesday trading.
Australian and New Zealand Dollars Rebound
The Australian dollar recovered from an early 0.5% decline that pushed it to a multi-week low, later moving slightly higher against the U.S. dollar. The New Zealand dollar also bounced back 0.3%, recovering from a seven-month low that followed weaker jobs data showing unemployment at its highest level since 2016. At one point, the kiwi briefly fell to a 12-year low against the Aussie.
Sterling Struggles Amid UK Tax Concerns
The British pound remained under pressure, hovering near a seven-month low, after UK finance minister Rachel Reeves signaled potential broad tax increases in her upcoming budget.
Meanwhile, the risk-off sentiment that began on Wall Street spilled into Asian stock markets, with the Nikkei falling 4.7% and South Korea’s KOSPI plunging 6.2%. The selloff was fueled by concerns over stretched tech valuations and renewed fears of a broader market correction.
Market Analysts See Pause, Not Panic
Market strategist Michael Brown of Pepperstone described the downturn as “a brief pause for breath” rather than a major shift in investor sentiment, noting that dips remain buying opportunities for bullish traders.
The yen gained as much as 0.5% before settling flat around 153.62 per dollar. The franc rose 0.3% at one point before easing slightly, trading 0.2% higher at 0.8090 per dollar.
Dollar Strengthens on Haven Demand and Fed Uncertainty
The U.S. dollar index, which tracks the greenback against six major peers including the yen, franc, euro, and sterling, was steady at 100.16 after spiking to 100.25 in the prior session. The dollar’s resilience reflected safe-haven flows and fading expectations for near-term Federal Reserve rate cuts, as Fed officials remain divided on policy direction.
Economic Data Delays and Bitcoin Rebound
A record-long U.S. government shutdown has delayed key macroeconomic data releases, putting added focus on the upcoming ADP private payrolls report later Wednesday.
In other currency moves, the euro traded flat at $1.1486 after a 0.3% rise the previous session, while sterling held steady at $1.3026 following a sharp 0.9% drop on Tuesday.
Among digital assets, Bitcoin rose 1.5% to around $101,800, recovering from a steep 6.1% fall on Tuesday that briefly pushed it below $99,000 for the first time since June 22.
