Evergrande Coupon Payment Agreement, PBOC Liquidity Boost Soothe Nerves

Headlines outlining an agreement between Evergrande's main onshore unit and holders of its yuan bond on coupon payments due Sep 23 provided relief for risk appetite, in the wake of yesterday's reports noting that the Group missed interest payments to two bank creditors. The PBOC helped boost sentiment as it returned from Chinese holidays with a relatively generous liquidity injection. That said, the initial risk-on market reaction moderated somewhat as the Evergrande story received closer scrutiny.

• The combination of the latest goings-on in the Evergrande saga and PBOC liquidity injection soothed the nerves, allowing the yuan to garner some strength. China's central bank set its central USD/CNY mid-point slightly higher than expected and left LPR rates unchanged, but both fixings were overshadowed by aforementioned developments.
• Risk-on impetus from China swept across G10 FX space, providing a shot in the arm for high-beta currencies. The Antipodeans shook off their initial weakness, which prompted NZD/USD to retest yesterday's low in early Asia-Pac trade.
• The yen retreated as Chinese headlines dented demand for safe haven assets. The BoJ left key monetary policy settings unchanged but USD/JPY overnight implied volatility remained in close proximity to two-month highs.
• FOMC monetary policy decision headlines the global data docket today.