Caution Dominates As Inflation Data Take Centre Stage

Defensive flows were evident as Chinese inflation data took focus, albeit the release failed to elicit much reaction in broader FX space. Offshore yuan was unfazed as consumer price growth marginally surpassed expectations, while factory-gate inflation was considerably faster than forecast.

• Antipodean currencies went offered. The preliminary ANZ Business Outlook data showed a deterioration in NZ firms' sentiment, as "all forward-looking indicators except employment intentions fell," which may have sapped some strength from the kiwi. The Aussie was pressured by a slump in iron ore prices.
• The yen outperformed as participants sought safe haven assets. USD/JPY edged lower but remained within the confines of yesterday's range.
• U.S. CPI steals the limelight today, with German and Norwegian counterparts also due. Weekly U.S. jobless claims also hit today, as the nation will observe a market holiday on Thursday. Central bank speaker slate features ECB's Elderson, BoE's Tenreyro and Riksbank's Breman.