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AUD and NZD Lose Ground Against JPY Ahead Of FOMC

FOREX

The USD is slightly higher against higher beta FX, but gains are modest at this stage. This looks to be unwinding or some of the gains seen overnight post the US CPI miss, as cross asset signals have mostly been positive today. Regional equities are higher, while US equity futures are tracking higher and US cash Tsy yields are down a touch.

  • USD/JPY is back sub 135.50 but has largely been range bound. Data was on the firmer side of expectations in terms of the Tankan survey, but didn't impact sentiment a great deal. Yen demand was evident ahead of the Tokyo fix, with USD/JPY's low for the session (135.29), recorded around this time.
  • NZD/USD is the weakest G10 performer, down 0.30% to 0.6445 at this stage. Support is evident around the 0.6435 region. The government's fiscal update projects a recession next year, but it is forecast to be a shallow one. More work also needs to be done to bring down inflation pressures, but these are well worn themes from the authorities.
  • AUD/USD has outperformed slightly against NZD, last around 0.6840/45, off 0.20% for the session. Iron ore is lower, back sub $108/tonne. Some concerns around China's near-term growth prospects weighing on the outlook.
  • Coming up, UK CPI is out, but the FOMC decision will dominate the overnight session.
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