Aussie Dollar Lags, Greenback Shakes Off Weakness

The Aussie dollar went offered, lagging better risk sentiment, amid positioning ahead of this weekend's federal election. This week's opinion polls have shown the race tightening, with the prospect of a hung parliament likely putting some participants on the defensive. On the eve of the election day, the opposition Labour party remains ahead of the ruling Liberal/National Coalition, but PM Morrison could still replicate his upset victory from last election, while a minority Labour administration propped up by the Greens could lead to policy instability.

• The news that Shanghai found three COVID-19 cases outside of quarantine facilities, snapping a six-day run of no community transmission, applied pressure to offshore yuan. Spot USD/CNH remains ~120 pips above neutral levels, after the PBOC trimmed its 5-Year LPR by a record amount of 15ppt, while keeping the 1-Year LPR unchanged (confusion in headlines sparked some short-lived volatility).
• NZD/USD is on track to register its first weekly gain after seven consecutive weeks of losses. All key data ahead of next Wednesday's RBNZ monetary policy meeting have been released, leaving market participants to digest available signals.
• There was good demand for CHF, which sits atop the G10 pile. Regional reaction to remarks from SNB Pres Jordan may have facilitated the move, after the official flagged a sense of concern with price pressures.
• The greenback traded on a firmer footing, aided by an uptick in U.S. Tsy yields.
• The yen firmed even as it is a Gotobi Day today.
• UK retail sales & EZ consumer confidence will take focus later in the day. Comments are due from ECB's Muller, Kazaks, Simkus, Centeno, de Cos as well as BoE's Pill.