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GBP Falls Again, CHF JPY Rise despite RiskOn mood

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Rates as of 0500 GMT

Market Recap

Another day, another leg lower for GBP. Selling sterling seems to be the markets main occupation nowadays.

Once again the selling of sterling may have been connected to buying of euros, which gained for the fourth day to recover the 1.19 level, last seen in the morning when I open my spreadsheet on March 23rd. It looks like perhaps people are getting more optimistic about the rollout of a vaccine in the EU and less optimistic about the comparable move in the UK. EUR didnt react much to the release of the minutes of the March 11th European Central Bank meeting, which revealed that the Governing Council agree that the recent tightening of financial conditions in the euro area was premature.

Also another day, another record high for the stock markets, with the SP 500, STOXX 600 and MSCI World Index all moving further into record territory. At the same time, markets are apparently getting more reassured as the VIX index of expected stock market volatility fell below 17 for the first time since the pandemic began last year.

Bond market volatility however remains high as the skittish market assesses how the Fed may react to the recent good US economic data in light of its new average inflation targeting monetary policy framework. Fed Chair Powell yesterday mostly just repeated his usual dovish message, but that was enough to reassure investors who have responded to the recent strong economic data, such as Fridays stunning US nonfarm…

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