CPI Beat Boosts Aussie, Yen Loses Its Allure

Upbeat CPI data extended a helping hand to the Aussie dollar, helping it outperform all of its G10 peers. Headline inflation accelerated to a two-decade high of +5.1% Y/Y, while the key measure of core price growth breached the RBA's target range of +2.0%-3.0% Y/Y, with both printing above consensus forecasts. The report prompted participants to add hawkish RBA bets, with markets now fully pricing a 15bp cash rate hike next Tuesday.

• The yen sold off across the board amid reduced demand for safe haven currencies, even as regional headline flow failed to offer any reassurance on familiar growth risks. Participants were preparing for Thursday's BoJ monetary policy decision and a long weekend in Japan.
• Spillover from commodity markets may have helped underpin oil-tied FX at the yen's expense. Crude futures crept higher amid the latest escalation in energy spat between Russia and two Eastern European nations.
• Spot USD/CNH lost some altitude and is on track to snap its six-day impulsive winning streak. China's President Xi called on his officials to make "all out" efforts to boost infrastructure spending.
• Flash U.S. wholesale inventories headline today's particularly thin data docket. Comments are due from ECB's Lagarde, Lane & Muller as well as BoC's Macklem.