ForexLive European FX news wrap: Dollar firms as risk appetite gets sapped

Headlines:

• Dollar gains as risk appetite gets a check back
• Weekly update on interest rate expectations
• SNB cuts key policy rate by 25 bps to 0.25%, as expected
• SNB chair Schlegel: With this step, monetary conditions are appropriate
• SNB chair Schlegel: Swiss inflation has developed in line with expectations
• ECB's Lagarde: Our analysis suggests US tariffs will lower growth by 0.3% in first year
• UK January ILO unemployment rate 4.4% vs 4.4% expected
• Germany February PPI -0.2% vs +0.1% m/m expected
• EU says considering to delay first set of counter-tariffs against US to mid-April
• China economists urge Beijing to continue ramping up support for services consumption

Markets:

• JPY leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.5%
• US 10-year yields down 5.5 bps to 4.200%
• Gold down 0.5% to $3,032.64
• WTI crude flat at $67.16
• Bitcoin down 0.1% to $85,269

The main highlight of the session was the SNB policy decision but as risk appetite gets sapped, that is setting the tone in broader markets ahead of US trading today.

The Swiss central bank delivered their final rate cut for the current cycle as expected, with the franc falling slightly in the aftermath. Traders were pricing in ~68% odds of a rate cut, so the decision reaffirmed that and the remainder pricing. USD/CHF moved up from 0.8770 to 0.8800 before keeping thereabouts as risk sentiment faltered.

The selling hit after the opening hour in Europe with regional equities also being struck alongside US futures. S&P 500 futures were up as much as 0.5% earlier in the day but are now down by that much. Meanwhile, Germany's DAX was more tentative at the open before seeing declines of around 2% at the lows just a while ago.

The mood is turning sour as the post-Fed rebound fades in what is setting up to be a turnaround Thursday for markets.

The broader risk retreat saw Treasury yields fall as well with 10-year yields slipping to 4.20%. That is keeping a bid in the yen, with USD/JPY falling from 148.70 to 148.45 on the day.

That said, the dollar is stronger across the board elsewhere with EUR/USD falling from 1.0900 to 1.0840 during the session and GBP/USD down from 1.3000 to 1.2950 levels currently.

The commodity currencies are also feeling the pinch amid the risk aversion with USD/CAD up 0.4% to 1.4385 and AUD/USD down 1.1% to 0.6285 currently. The latter is not helped by a rather dismal Australian jobs report earlier in the day.

Coming up, we have the BOE policy decision still to work through. But as we look towards US trading later, it will be all about the risk mood once again amid more headlines involving Trump's tariffs alongside political and geopolitical developments.