Commodity Market Dynamics Underpin AUD

AUD topped the G10 pile on the back of firmer commodity prices, as crude oil extended its rally after OPEC+ pledged to continue reducing the supply surplus, while iron ore gained after Vale's quarterly output undershot forecasts. In addition, the Australian Bureau of Statistics highlighted a surge in iron ore exports to a fresh record of A$12.6bn in December. The data was part of the monthly trade report, which saw trade surplus widen less than expected, owing to a miss in exports. However, also on the data front, a recovery in Australia's NAB Business Confidence helped keep the Australian dollar buoyant. BBG trader source flagged demand for the Aussie from local exporters, with option-related offers reportedly placed ahead of sizeable $0.7650 strikes. AUD/NZD snapped its four-day losing streak and showed above the prior day's range.

• USD/JPY edged higher, extending its winning streak to seven days in a row. There are some chunky option expiries coming up at today's NY cut, including $1.6bn of options with strikes at at Y104.30-40, $1.4bn at Y105.00 & 41.0bn at Y105.55-65.
• The greenback fared relatively well, but the DXY struggled to break out of yesterday's range despite adding a handful of pips through the session.
• The PBOC fixed USD/CNY at CNY6.4605 today, 14 pips above sell side estimates and the twelfth straight fix above the estimate. The PBOC matched liquidity withdrawals with injections today, but used the 14-day repo tool as we get closer to LNY.
• GBP went offered ahead of today's announcement of the BoE's latest monetary policy decision. Cable printed worst levels in two weeks and narrowed in on the $1.3600 mark.
• Other than the BoE decision, focus turns to U.S. initial jobless claims, factory orders & final durable goods orders, EZ retail sales, ECB economic bulletin and comments from ECB's de Cos and Fed's Kaplan & Daly.