Greenback Drives Price Action As Biden Takes Centre Stage

All eyes on the U.S. in the early part of the Asia session on Friday. President Elect Biden holds a press conference on the latest proposed stimulus plan. FX price action has lacked any violent swings in early Asia-Pac trade so far.

• Reports of a stimulus package that could amount to as much as $2tn helped boost the USD initially Thursday, but selling pressure knocked the greenback as stocks advanced, while subsequent comments from Fed Chair Powell, downplaying potential for any rate hikes/policy exit in the near-term, prevented recovery attempts for the greenback.
• JPY seen treading water. USD/JPY failed to hold gains registered in Thursday's Asia-Pac session on the back of USD weakness, the pair last flat at 103.79.
• AUD & NZD both slightly higher supported by a weaker USD and stronger commodity complex. AUD largely ignored positive home loans data.
• The single currency remains under pressure as Italian politics begins to take focus. Following the withdrawal of Matteo Renzi's ministers from the governing coalition, Italian PM Conte faces a stark set of choices to continue governing, including a snap general election. EUR/USD last at 1.2152.
• The PBOC fixed USD/CNY at 6.4633, around 113pips lower than yesterday as greenback weakness translates into redback strength – the fix was broadly in-line with sell side estimates. The PBOC are scheduled to conduct MLF operations today with expectations for an injection of CNHY 770bn. Sentiment in the region could be impacted by the announcement from the Trump administration that it would blacklist additional Chinese companies over military links.
• The Bank of Korea kept rates on hold at 0.50% as expected by all economists surveyed. BoK Gov. Lee Ju-yeol has warned previously that loose monetary policy following the onset of the pandemic risks taking household debt to unsustainable levels.
• As we are nearing the end of the week, focus turns to U.S. advance retail sales, Empire M'fing & flash U. of Mich. Survey, UK monthly activity indicators, French & Swedish CPI reports, as well as comments from Fed's Kashkari and ECB's Visco, Stournaras, Herodotou, Makhlouf & Vasiliauskas.