The Swiss franc maintained a modest advantage, and the U.S. dollar remained resilient, hovering near its highest level since April 1, a peak reached late on Tuesday.
Antipodean Recovery After Early Pressure
The Australian dollar, a key barometer of risk appetite, recovered from a 0.5% slide to a multi-week low and traded marginally higher against the greenback by the European morning. Its regional counterpart, the New Zealand dollar, also found support after plunging to a seven-month low in the wake of weaker-than-expected employment data showing the jobless rate at its highest since 2016.
The kiwi was last up 0.3%, having briefly touched a 12-year low against the Australian dollar, before buyers stepped in.
Sterling Struggles as Tax Concerns Weigh
In contrast, sterling continued to face pressure, holding near a seven-month low following remarks from British Finance Minister Rachel Reeves, who hinted at broad tax increases in her upcoming budget later this month. The pound was steady at $1.3026, unable to recover from Tuesday’s 0.9% decline.
The euro was little changed at $1.1486, having slipped 0.3% the previous session to its weakest level in seven months.
Asian Markets Hit Hard by Risk-Off Sentiment
Earlier, a wave of risk aversion had rippled through Asian equity markets following a sharp tech-led sell-off on Wall Street, where investors grew wary of stretched stock valuations. The sell-off pushed Japan’s Nikkei down as much as 4.7% and South Korea’s KOSPI by 6.2%, marking their steepest one-day drops in months.
However, analysts cautioned against interpreting the correction as a major shift in market sentiment.
“The best framing of yesterday’s trade is one of the market simply taking a bit of a pause for breath, rather than a decisive turn against the bulls,” said Michael Brown, Senior Research Strategist at Pepperstone. “Dips remain buying opportunities in my mind.”
Dollar Supported by Fed Uncertainty and Haven Flows
The U.S. dollar index, which tracks the greenback against six major currencies, was steady at 100.16, after briefly touching 100.25—its highest level in more than seven months. The dollar’s strength has been underpinned by both safe-haven demand and a scaling back of expectations for near-term Federal Reserve rate cuts amid internal divisions among policymakers over the path of monetary policy.
Market uncertainty has been compounded by an unprecedented government shutdown, which has disrupted the release of key economic data, leaving investors to rely on private indicators such as the ADP payrolls report, due later on Wednesday, for clues on U.S. labor market trends.
Safe-Haven Moves and Crypto Bounce
The yen initially rose as much as 0.5% against the dollar before paring gains to trade flat at ¥153.62, while the Swiss franc remained 0.2% stronger at 0.8090 per dollar.
In digital markets, bitcoin rebounded 1.5% to around $101,800 after tumbling below $99,000 on Tuesday — its lowest level since June 22 — following a 6.1% sell-off.
Overall, the day’s trading reflected a cooling of panic after the overnight equity rout, with investors cautiously returning to riskier assets while maintaining a defensive tilt. Analysts say markets are now watching closely for signs from the Federal Reserve and upcoming economic data to determine whether this stabilization marks a pause or a pivot in global risk sentiment.