DXY Gives Back Some Of Tuesday’s Rally

The USD struggled in Asia-Pac dealing, with a bid in the Hang Seng, linked largely to hopes surrounding Chinese policymaker support (from both a broad fiscal and property market-specific perspective) and slightly lower U.S. Tsy yields applying pressure.

• The greenback found itself at the foot of the G10 FX performance table as a result, while the JPY lost ground against all of its G10 FX peers, save the USD.
• The AUD was at the other end of the performance table, initially benefitting from its high beta status and links between the Australian economy and China, before it advanced further on the back of BBG source reports which suggested that “Chinese bureaucrats are discussing plans to resume some imports of Australian coal after a more than two-year ban as relations between the nations improve.”
• Elsewhere, USD/CNH traded back towards Tuesday’s multi-moth low, with the aforementioned hope re: deeper policy support for the economy, the USD/CNY mid-point fixing printing at the strongest level (in CNY terms) since mid-September (although that was broadly in line with estimates, providing a marginal 3 pip difference vs. the BBG survey) and seasonal onshore CNY demand ahead of the Lunar New Year break supporting the yuan.
• Looking ahead, the ISM Manufacturing survey and JOLTS job openings out of the U.S. are main data points scheduled ahead of the release of the meeting minutes covering the December FOMC.