While the dollar is slightly higher against most major currencies
The biggest movers on the day have been JPY pairs as yen traders are still making up their mind on the market movements today.
USD/JPY rose initially on the back of higher yields and the dollar was the best performer early on, but the focus then turned towards the slump in equities and the Japanese yen gained some traction on the back of that.
It's not entirely a full-fledged risk off tone yet though, more of a nibble at the moment. But commodities and oil are also taking a hit on the day, so we could see more developments once European traders enter into the picture.
Right now, it may still look like a correction in the equities market after the rally to start the year - but it only takes a bit of fear to induce more fear that could lead to something larger at play in due time.
The breakout in yields continue to be the major topic in markets, as the focus also shifts towards the possibility that higher yields will drive money out of stocks - since dividend stocks will look less attractive at this point. If that really happens on a global/large scale, the reallocation away from stocks could trigger a safe haven play as well.
Back to FX, we're seeing the AUD lag behind on the day - as market talk is that there are some heavy fund sellers in AUD/JPY ahead of this week's risk event for the aussie (CPI data). But I reckon it's also due to the possibility of a shift towards more of a risk off environment as well.
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