Dollar Under Pressure In Wake Of FOMC Minutes & U.S. Data

Thanksgiving holiday-thinned Asia-Pac trade was dominated by regional reaction to Wednesday’s soft U.S. economic data (PMIs and jobless claims) and the FOMC meeting minutes, which pressured the USD.

• We saw another uptick in COVID cases in China, with new daily case numbers in the country now through their previous ’22 peak.
• The JPY leads the G10 FX pack, with Tokyo returning from a mid-week holiday.
• Elsewhere, RBNZ Governor Orr & chief economist Conway reiterated the Bank’s focus on getting inflation under control in an early parliamentary address.
• We also saw the BoK deliver the widely expected 25bp rate hike, although the Bank signalled the likelihood that the tightening cycle will draw to an end in the early part of ’23, while indicating the board’s range of preferences re: the terminal rate (from no more tightening to 50bp of additional hikes).
• USD/CNH operates within the confines of Wednesday’s range, with no bias observed in today’s USD/CNY mid-point fixing, as markets looked through the latest round of COVID lockdowns in China and leant on both realised and expected support for the Chinese economy, which supported the yuan at the margin.
• Asia FX played catch up to the USD weakness witnessed since yesterday’s local market closes, with the respective moves extending throughout the day.
• German IFO data, the accounts covering the latest ECB meeting and a range of ECB speakers headline on Thursday. A reminder that the U.S. observes a public holiday today.