The slight hints of risk aversion are still at play for now
That is keeping the likes of the dollar, franc and yen in particular bid during European morning trade. USD/JPY is now retreating to fresh session lows of 103.62 now as the retreat following a test of key trendline resistance levels continues to play out:
EUR/CHF is also down to 1.0760 at the lows for the day while yen crosses are also trading to fresh session lows amid the slightly more defensive risk tilt.
European equities are seeing red for the mots part across the board with the DAX down 0.7% while S&P 500 futures are also keeping lower, down 0.4%.
The softer mood is pinning commodity currencies lower on the day, with AUD/USD down near 0.7730 and testing swing region support near its key hourly moving averages:
The market continues to weigh up the Powell and Biden narratives since yesterday but risk sentiment seems to be very much driven by the notion that the $1.9 trillion stimulus proposal by Biden may run into trouble to get bipartisan support for a chunk of it.
As for the bond market, the reaction could either be reflecting that or in part Powell's remarks that the Fed is also not anywhere near to thinking about tapering at the moment.
There was some selling in Treasuries post-Powell but that has since reversed as the market digests Biden's stimulus proposal ahead of the North American trading today.
