A$ Higher On RBA Statement, China Equity Gains

The USD is mostly lower in after Tuesday Asia Pac dealings as we approach the London/EU crossover. The BBDXY is down a little over 0.10%, last near 1243.2. Lower US yields, and firmer China equities have weighed on the USD.

• AUD/USD has been the strongest performer. The pair rose above 0.6500 as the RBA stated it couldn't rule out further rate hikes. Still, the subsequent press conference from RBA Governor Bullock stated the risks are fairly balanced around the next direction for policy rates.
• The A$ last tracks near 0.6515, around +0.50% firmer for the session.
• An additional support has come from a rebound in China equities, which are comfortably in the green. The sovereign wealth fund will boost states in local equities, while the regulator will also look to curb activities around securities lending. President Xi is expected to be briefed by the regulator potentially today (BBG).
• NZD/USD has been dragged higher by the A$, the pair last near 0.6070/75, around +0.30% firmer for the session.
• The AUD/NZD cross has bounced again from the low 1.0700, to track near 1.0730 in recent dealings.
• USD/JPY has drifted lower, last near 148.40, around 0.20% stronger in yen terms. US yields have pulled back by 2-4bps across the benchmarks, unwinding some of the strong gains seen in the past 2 sessions.
• Looking ahead, the Fed’s Mester speaks on the economic outlook and Kashkari and Collins also make appearances. There is no US data of note but euro area December retail sales are released.