Early Asia Trade Sees Extension Of Friday’s USD Bid

Friday’s USD bid has extended, with the greenback sitting atop the G10 FX pile as Asia-Pac participants react to Friday’s firmer than expected U.S. PPI print, with one eye on this week’s U.S. CPI release (Tuesday) & a raft of impending central bank decisions.

• Note that Friday saw Citi highlight that “FX flows were very light overall, meaning most of the price action likely lacked conviction and was exacerbated by limited client activity and poor liquidity.” That hasn’t stopped Asia from extending the post-PPI move.
• Cross-asset, U.S. Tsy yields are little changed to a touch higher, aiding the USD bid, while e-minis and the Hang Seng are offered.
• AUD & NZD find themselves at the bottom of the G10 FX pile against this backdrop.
• The latest round of COVID-related headlines out of China have done little for markets on the whole.
• The latest USD/CNY mid-point fixing from the PBoC was in line with broader exp.
• The Asia-Pac docket doesn’t present much in the way of notable risk events, leaving focus on headline flow and wider risk appetite. As the day wears on participants will look to UK economic activity data, with the aforementioned U.S. CPI data and a raft of central bank decisions (headlined by the Fed, ECB & BoE) providing the focal points later in the week.