What you need to know on Wednesday 27 April:

FX trade was once again dominated by risk-off flows this Tuesday, with the safe-haven yen and US dollar’s outperforming as a result, as US equities cratered. Traders cited everything from China lockdown risk, rising economic and military tensions between Russia/NATO amid the ongoing Russo-Ukraine war, a worsening global growth outlook and the prospect of aggressive monetary tightening from many major central banks as weighing on sentiment. Regarding geopolitics, reports that Russia’s Gazprom is to begin halting gas supplies to Poland and through Bulgaria as soon as 27 April did little to help sentiment late in the session.

The yen extended its recent run of gains against its G10 counterparts, with USD/JPY dropping back to the mid-127.00s versus last week’s highs above 129.00 and EUR/JPY hitting two weeks in the mid-135.00s. Meanwhile, GBP/JPY extended its three-day run of losses from last week’s highs above 168.00 to nearly 5.0%, with the pair eyeing a test of 160.00.

The US Dollar Index (DXY), meanwhile, hit fresh multi-month highs in the 102.30s, as it continues to hone in one 2020 highs near 103.00. The bulk of the gains for the DXY were driven by losses in EUR/USD and GBP/USD, with the euro and sterling the two worst performers of the major G10 currencies. The former came within a whisker of hitting its 2020 low at 1.0936 and posted a 0.7% on-the-day drop, while the latter slumped over 1.2% to fall into the upper 1.2500s, taking its three-day run of losses to around 3.5%.

Traders cited receding BoE tightening bets and concerning UK government borrowing data for the 2021/22 year as weighing on sentiment towards the pound and the usual concerns about energy-related stagflation in the Eurozone as weighing on the euro. Meanwhile, robust US March Durable Goods, February S&P/Case-Shiller House Price Index and April Conference Board Consumer Confidence survey data released earlier in the day did not have an impact on USD sentiment.

Turning to the rest of the major G10 currencies; the Aussie, kiwi and loonie all held up better than sterling, losing roughly 0.6% on the day each versus the buck, with the losses cushioned as energy prices gained on geopolitical tensions. AUD/USD nontheless fell to its lowest levels since late February in the 0.7130s, NZD/USD fell back under 0.6600 and USDCAD hit new multi-week highs above 1.2800.

Attention turns in the upcoming session to the release of Australian Q1 2022 Consumer Price Inflation figures and Chinese February Industrial Profits data at 0230BST. However, the main driver of sentiment through the coming Asia Pacific session is likely to remain the state of the Covid-19 outbreak/lockdown situation in China.