Market News & Analysis

The Australian dollar fell to the bottom of the pack following today’s RBA minutes, as traders questioned RBA’s confidence in their labour market forecasts.

For the second day in a row, the Japanese yen is the weakest major currency as today’s heavy risk-on bent leads to selling in the safe haven currency. Meanwhile, the aussie has caught a big bid despite the RBA citing “increased risks” to the household sector.

The first day of the new month has started positively for equities and risk-sensitive yen pairs, while commodity dollars have also shown relative strength so far in the session.

One of the first things that new traders to the FX markets learn is that many currencies are correlated with other markets. For instance, the close relationship between oil and the Canadian dollar or certain metals and the Australian dollar are intuitive given the importance of exporting those commodities for the Canadian and Australian economies.

Today the generally positive sentiment in the stock markets has helped to keep this risk-sensitive AUD/JPY cross supported ahead of Aussie employment data on Thursday and the Bank of Japan’s policy decision a day later on Friday.