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BLOCK, Sep'22 1Y Strip


Prospects For BoC Rate Hike

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Greenback Holds Losses For Second Day


The greenback is holding its losses after declining for a second day on Monday, hopes for a US fiscal stimulus plan underpins the bid in risk assets. Volumes remain thin and news flow light on the approach to LNY.

  • AUD is higher in Asia on Tuesday, consolidating above the 0.77 handle. Data has been mixed, early in the session ANZ released weekly consumer confidence figures. The headline index dropped to 111.4 from 112.1, the sub-components of the index were also mostly weak. Later the NAB business survey saw business conditions fall, while business confidence rose, upward revisions to the previous readings were also positive and the release helped underpin AUD/USD.
  • NZD is higher as local markets return from a holiday. NZ FinMin Robertson delivered his 2021 Budget Policy Statement, noting that the Tsy won't set itself a specific net debt target this year and will aim to stabilise net debt by mid-2020s.
  • JPY gaining slightly as the greenback continues to pull back. Japanese earnings accelerated their decline in Dec, but fell at a slower pace than forecast. FinMin Aso informed that the cabinet has approved Y1.1tn of reserve fund use, which will be used for Covid-19 response measures. A Jiji report suggested that the gov't is considering lifting the state of emergency in Aichi, Gifu & Fukuoka prefectures.
  • The PBOC fixed USD/CNY at 6.4533, around 10 pips above sell side estimates, PBOC injected a net CNY 30bn. Offshore yuan has continued to gain in Asia on Tuesday after the PBOC helped reassure markets saying its policies would remain stable yet flexible in its quarterly monetary policy report. CNH spiked following the fix/OMO ops.
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