Antipodean Divergence Unfolds In Muted Asia Trade

Major USD pairs stuck to tight ranges in muted Asia-Pac trade, as Lunar New Year holidays in major regional financial centres continued to weigh on activity. The DXY struggled for any topside impetus, operating in close proximity to yesterday's low.

• The Aussie dollar outperformed, showing some limited volatility as participants reacted to remarks from RBA Gov Lowe. AUD/USD crept higher ahead of Lowe's address, but eased off as his scripted comments reaffirmed the Bank's patient stance. The rate then posted a short-lived uptick as the official flagged the possibility of a cash rate hike this year, while pointing to a multitude of uncertainties ahead. The rate hovers just above neutral levels as we type, north of broken resistance from Jan 7 low of $0.7130.
• The kiwi dollar underperformed, with little in the way of initial reaction to New Zealand's Q4 jobs data. The unemployment rate dropped to an all-time low, indicating continued tightness in the labour market. Employment grew slower than forecast, but still marked the fifth consecutive quarter of steady increases. ASB altered their RBNZ call and now see the OCR peaking at 2.75% (prev. 2.00%) in early 2023, following a "steady pace of 25bp hikes" at each MPC meeting.
• U.S. ADP employment change, flash EZ CPI as well as comments from BoC's Macklem & Gravelle will take focus later in the day.