Another quiet Asian session as traders seem content to be on the sidelines ahead of the potential event risk that is slated for release starting later on today. The US dollar was stronger -vs- the Euro and Yen and mixed -vs the rest of the majors.
For the past few years anyone who has tried to categorize the sentiment of the market has resorted to the terms "risk-on" and "risk-off". When the market was risk averse (risk off) then the dollar usually strengthened -vs- all the majors and weakened -vs- the yen and the opposite was true when there was a rise in risk appetite (risk on). Lately this correlation has become a bit murky as there seems to be a shift in the global paradigm. The dollar seems to be on the verge of benefiting from the fact that the US economy, despite its issues, is being seen as the healthiest of the major economies. The upcoming events, especially the central bank monetary policy meetings (BOJ, ECB, BOE) and the US unemployment report will be quite informative in reinforcing or negating this view and the moves that we are seeing in the currency markets lately appear to be symptomatic of this uncertainty.