Risk sentiment is under pressure again this morning and consensus seems to still favour selling into any risk rallies

TO BE NOTED: From the FT:

"Risk aversion lends dollar and yen support

By Neil Dennis

Published: April 22 2009 10:25 | Last updated: April 22 2009 10:25

The US dollar and the yen advanced on Wednesday at the expense of higher-yielding units like the Australian and New Zealand dollars and emerging market currencies.

Risk sentiment was again the focus of the session, as cautious exchanges on equity markets ahead of a raft of important US earnings reports lent support for the perceived havens of the US and Japanese currenies.

Investors have digested a number of results, particularly banks, in recent sessions, and the response has been mixed. Equities rallied last week after stronger-than-expected profits from Goldman Sachs and JPMorgan, but sold off in response to similar results from Bank of America on Monday.

”To guess how markets will react to positive or negative surprises at the moment is as good as a coin flip,” said Richard Wiltshire at ETX Capital.

”Risk sentiment is under pressure again this morning and consensus seems to still favour selling into any risk rallies.”

The euro fell 0.2 per cent against the dollar to $1.2921 and lost 0.5 per cent to Y127.01 against the yen.

Gains were more prominent against higher-yielders as waning risk appetite favoured the unwinding of carry trades, where low-yielding currencies like the dollar and yen are sold to buy assets with better yields.

The New Zealand dollar shed 1.5 per cent to $0.5532 and 2 per cent to Y54.35 against the dollar and yen respectively. The Australian dollar lost 1.1 per cent to $0.7023 and 1.4 per cent to Y69.01.

Sterling fell across the board after further weak data on the UK economy. Although the number of new claimants of unemployment benefits rose by less than expected in March, the official jobless rate remained at 4.5 per cent, its highest level since 1998. Furthermore, average earnings fell 2.1 per cent in February, the weakest on record, leaving the three-month rolling annual rate of increase at just 0.1 per cent, another record low.

The pound fell 0.9 per cent against the dollar to $1.4541, was down 0.8 per cent to £0.8890 against the euro, and shed 1.3 per cent to Y142.89 against the yen.

Risk aversion left many emerging market currencies lower. Poland’s zloty lost 0.9 per cent to 3.4120 against the dollar and stood 0.7 per cent lower at 4.4135 against the euro. There were losses too for the Hungarian forint, Ukraine’s hryvnia and the Turkish lira.

Copyright The Financial Times Limited 2009"