FX Daily Wrap: marked turnaround in risk appetite/sentiment

A turnaround Tuesday in many ways as risk appetite returned and picked up significantly after reports that North Korea is ready and willing to discuss nuclear disarmament under certain conditions. The so called ‘safe-haven’ currencies lost more ground after an improvement in broad sentiment overnight, while the likes of the Nzd, Aud, Cad and Eur accelerated recovery gains vs the Usd to peaks above 0.7300, almost 0.7850, 1.2865 and 1.2400+ respectively from session lows around 0.7220, 0.7755, 1.2995 and 1.2330. Cable vaulted 1.3900, but lagged amidst ongoing Brexit uncertainty that kept Eur/Gbp north of 0.8900 despite some reports about Eur/cross flow on the bid side. Usd/Jpy retested offers, a major Fib and psychological resistance near 106.50, but recoiled again and slipped back to 106.00, with Usd/Chf easing back through 0.9400. As a result, the DXY lost hold of the 90.000 level, and almost reversed to test nearest strong technical support at 89.503 (February 26 low). Ahead, the Aud will be eyeing Q4 GDP data for some independent direction and hot on the heels of the still neutral/cautious RBA, while the Cad focus shifts to Wednesday’s BoC policy meeting that is expected to culminate in unchanged rates and also an on hold stance due to all the ongoing NAFTA and import tariff uncertainty. More immediately, Sterling may derive some impetus from BoE’s Haldane and/or any further comments on transition from the latest round of UK-EU meetings.