European FX Get Reprieve From Missile Updates, Greenback Buoyed By Higher U.S. Tsy Yields

G10 currencies with exposure to Eastern European geopolitics gained after U.S. President Joe Biden said it was "unlikely" that the missile that killed two people in Poland on Tuesday was fired from Russia, based on preliminary assessment of its trajectory. While Poland has announced an international probe into the incident, the broader perception was that the blast was likely a tragic accident rather than a deliberate strike, which would reduce the risk of a direct Russia-NATO confrontation.

• Biden's comments allowed EUR to become the best performer among major currencies, with the likes of DKK and SEK also finding poise. The Norwegian Krone lagged behind its Scandie cousins amid softer crude oil prices. Spot EUR/PLN topped out at at PLN4.7848 but then trimmed the bulk of its initial gains on Biden's remarks.
• The BBDXY index came under pressure as the POTUS spoke, virtually erasing its initial 0.26% upswing. Selling interest quickly dissipated, with the index advancing to new session highs, as the greenback rebounded towards the top of the G10 scoreboard, supported by higher U.S. Tsy yields.
• The combination of geopolitical relief and sell-off in U.S. Tsys generated yen underperformance. Spot USD/JPY rallied past the Y140 mark, lodging session highs at Y140.29 but falling short of testing yesterday's peak.
• Data showing continued decline in China's new home prices facilitated the upswing in USD/CNH. The value of new residential properties fell 0.37% M/M last month, which was the fastest pace of decline since Feb 2015.
• Inflation data from the UK and Canada, U.S. advance retail sales and industrial output, as well as a busy central bank speaker slate dominated by ECB members take focus from here.