AUD Gains With Australia Set To Ease Border Rules, PBOC Signals Preference For Softer Yuan

High-beta G10 currencies showed resilience against the familiar combination of global monetary policy tightening/geopolitical tensions. The Aussie dollar was among the best performers, drawing further support from the announcement that Australia will re-open its international border to vaccinated visa holders within two weeks. Appetite for the AUD may have been fuelled by a record-breaking Q4 retail sales print, although the initial reaction was limited.

• The Eurozone's single currency traded on a softer footing, despite hawkish comments from ECB Governing Council Member Knot, who said he expected an interest-rate hike in Q4 this year. The geopolitical tension surrounding Russia's military build-up on the Ukrainian border may have sapped some strength from the EUR.
• Upon return from Lunar New Year holiday, the PBOC reached for its daily fixing of yuan reference rate to knock the redback on its head. China's central bank set the mid-point of the permitted USD/CNY band at CNY6.3580, 252 pips above consensus estimate, which represents the widest miss since June 2018. Spot USD/CNH posted a leg higher after the fixing, but eventually pulled back toward neutral levels.
• Worth noting that while markets in China and Taiwan re-opened after Lunar New Year holidays, those in New Zealand were shut in observance of the Waitangi Day.
• China's Caixin Services PMI, German industrial output & comments from ECB Pres Lagarde take focus from here.