Philip Wee at DBS Group Research points out that the Australian Dollar (AUD) has been a key beneficiary of the risk-on shift. AUD/USD broke above 0.72 after the Reserve Bank of Australia (RBA) signalled a pause following three consecutive rate hikes. The report suggests markets may rotate into other high-beta pairs as investors seek carry and growth exposure.

Australian Dollar benefits from risk recovery

"The global currency market has exhibited a classic V-shaped sentiment shift over the US-Iran conflict that closed the Strait of Hormuz."

"Risk appetite returned, favouring commodity-linked and high-yield currencies, especially the AUD, KRW, and GBP."

"AUD/USD’s break above 0.72 yesterday was notable, especially after the Reserve Bank of Australia signalled a pause after its third consecutive rate hike on Tuesday."

"Markets may rotate to NZD/USD, which broke above its 0.5925 resistance, on expectations that the Reserve Bank of New Zealand will follow the RBA’s lead and hike before the Fed later this month."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)