AUD Moves On The Back Of RBA Comments, PBoC Fix

Initial AUD appreciation was arrested by a much awaited speech from RBA Dep Gov Debelle, who knocked the currency on its head by offering some colour on the central bank's policy options, although without providing any clarity on timing. He listed bond purchases further out along the curve, trimming interest rates without making them negative, as well as negative interest rates and FX intervention. Although Debelle outlined the shortcomings of the last two measures, he noted that the RBA watches the FX rate as a weaker AUD would support economic recovery. AUD extended losses during the Q&A session, in which the Dep Gov downplayed his earlier remarks, noting that being an option does not mean being on the table. The driving force here was a knee-jerk move in the yuan, tracked by AUD, after the PBoC weakened its daily fixing of USD/CNY mid-point by the most since April, taking the rate to CNY6.7872 vs. BBG est. of CNY6.7815, signalling that it may be willing to constrain the pace of the redback's recent rally. AUD recovered in sync with the yuan, eventually paring most of its earlier losses.

• NZD and JPY marginally outperform in the G10 basket, after the Asia-Pac session saw little of note in the way of fresh news or data flow. Japanese markets were shut for a public holiday.
• KRW took a hit at the re-open of onshore trade, catching up with yesterday's risk-off flows, which carried over into Asia-Pac equity markets (only mainland Chinese benchmarks recouped losses). Elsewhere, losses in IDR prompted Bank Indonesia to intervene in domestic NDF market to stabilise the rupiah.
• Central bank speak picks up, with comments from Fed's Powell, Evans, Barkin and Bostic, BoE's Bailey and ECB's Villeroy, Lane and Panetta due. The Riksbank will deliver its MonPol decision. Data highlights include U.S. existing home sales & EZ consumer confidence.