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AUD & USD Slip, Yen Shows Some Strength In Morning Trade

FOREX

European FX remain on relatively firm footing, while the yen outperforms at the margin, amid the absence of notable fresh headline flow. The greenback and the Aussie dollar are the worst performers among major currencies. G10 FX pairs hold tight ranges, even as mainland China, Hong Kong and South Korea have returned from holidays, which means the PBOC is preparing to announce its first yuan fixing of the week.

  • The yen showed some strength in early dealing, possibly on the back of remarks by ex-BoJ member Kataoka from before the weekend. The former ultra-dovish Policy Board member said it was possible for the central bank to start normalising monetary policy in mid-2023 (once Gov Kuroda's tenure expires), albeit he stressed that sufficient progress on the inflation target by that time would be a "miracle."
  • Australian data have been mixed this morning, as CBA report indicating a slowdown in household spending was followed by confirmation of an improvement in Westpac Consumer Confidence. NAB Business Confidence provides the next data point of note today, with all three providing important forward-looking inputs to the RBA's thinking.
  • The BBDXY index is slightly softer but yet to test yesterday's lows, with participants setting their sights on U.S. CPI data due later today. Sharp drops in inflation expectations revealed by a NY Fed survey released Monday have inspired hope that the inbound report could show further cooling in consumer price growth.
  • Other than that, focus turns to the minutes from the BoK's most recent monetary policy meeting, German ZEW survey & final CPI reading, as well as UK jobs market data.

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