Caution Takes Hold, Circling Fed Hawks Cast Shadow Over Asia

Initial defensive feel deepened as the Asia-Pac session progressed, with G10 FX trading in a typical risk-off fashion. Regional players assessed the minutes from the FOMC's March monetary policy meeting, which reaffirmed intensifying hawkish leanings among Fed policymakers. The prospect of rapid balance-sheet reduction and the Fed's apparent sense of comfort with a potential 50bp rate hike undermined risk appetite, albeit the greenback struggled for meaningful topside impetus.

• As one might expect, high-beta currencies went offered and safe havens caught a bid. This brought some reprieve to the embattled yen, even as BoJ's Noguchi reaffirmed the Bank's commitment to its ultra-loose policy stance. USD/JPY shed a handful of pips but its RSI remained in overbought territory.
• Risk aversion translated into AUD/USD sales, preventing a golden cross formation from materialising on the daily chart. The pair's ascending 50-DMA now intersects just a few pips shy of the 200-DMA.
• Offshore yuan lost ground after China's State Council signalled intention to loosen monetary policy "at appropriate time" in a bid to stimulate the real economy amid heightened domestic and global economic risks.
• On the data front, EZ retail sales, German industrial output & U.S. weekly jobless claims take focus from here. Comments are due from BoE's Pill as well as Fed's Bullard, Bostic & Evans. In addition, the ECB will publish the account of its March monetary policy meeting.