DXY Edges Higher, Yen Consolidates Around Y124

The latest headline flow failed to add much new to the familiar narrative. The key gauge of broader USD strength (DXY) lodged a fresh cycle high, approaching the psychologically important 100 level. The greenback gained as U.S. Tsy yields pushed higher, driven by a sell-off in short end of the curve, as a week marked by continued hawkish Fed drumbeat draws to an end.

• The kiwi dollar underperformed ahead of next week's monetary policy decision, with NZD/USD lodging its worst levels in more than two weeks. It is unclear whether New Zealand's central bank will opt for an outsized 50bp rate hike, albeit the OIS strip prices a ~67% chance of of such outcome. NZD/USD implied 1-week volatility holds near yesterday's multi-week high.
• USD/JPY consolidated around the round figure of Y124.00 which provided a firm layer of resistance on Thursday. A breach of that level entailed further buying in early trade, with the rate running as high as to Y124.23. Demand petered out and the rate sank into negative territory ahead of the Tokyo fix, before a bouncing towards neutral levels.
• Offshore yuan slipped as China Securities Journal ran a front-page report noting that China is likely to cut banks' RRR in Q2, while Shanghai declared more than 20k new Covid-19 infections.
• Today's data highlights include U.S. wholesale inventories, Canadian jobless rate & Japan's Eco Watchers Survey. Speeches are due from ECB's de Cos, Centeno, Panetta, Stournaras, Makhlouf & Herodotou.