Correlations between currencies and their various pairs increase as their fundamental motivation intensifies. Perhaps the most prominent driver for the broader market now is the demand for or aversion to yield and risk. In the past six months, the general trend for this particular facet of the speculative market is clear: there has been a clear and persistent effort to unwind risky positions and move capital into assets that can buffer accounts from excessive volatility.

Sometimes the titles of ‘risky’ and ‘safe haven’ - when applied to a particular currency - are doled out without consideration as to what makes a currency high or low on the yield or risk spectrum. Just like investor sentiment itself, currencies are not static in their relationship to underlying risk trends.

Correlations between currencies are not arbitrarily developed. They are often born from fundamental commonalities between various pairs, shared traits whose importance can wax or wane with time. One of the most prominent and consistent ‘themes’ of the past 18 months has been the intensity of risk appetite trends. This does not necessarily refer to a direction in sentiment but rather its overarching influence over valuation and price action.

It is worth noting that aside from a few standout correlations (negative and positive) amongst the majors; the relationships in price action across the majors has generally dissipated in recent weeks and months.