Greenback Holds Lower

The greenback is holding lower levels in Asia after dropping on Tuesday. Impacted by hopes for a global economic recovery as the IMF increased its outlook for world growth in 2021 from 5.2% to 5.5%.

• AUD is slightly higher, AUD/USD up 5 pips at 0.7752. The rate touched 0.7764 after data showed CPI rose above expectations in Q4. CPI rose 0.9% Y/Y against expectations of 0.7%. While the figure was above consensus, it remains well below the RBA's target.
• NZD/USD is up 7 pips at 0.7231. In the latest update on the Covid-19 situation from PM Ardern she noted that "we can expect our borders to be impacted for much of this year," while the vaccination campaign will likely kick off no sooner than in mid-2021.
• JPY crosses have moved higher. USD/JPY up 7 pips at 103.70. There are reports in Kyodo that Japan could extend the state of emergency to the end of February, from the touted end data of Feb. 7.
• PBOC set USD/CNY reference rate at 6.4665, 30 pips above sell side estimates – the second straight day of a significant miss which again underscores the PBOC's asymmetric response function to the yuan. The bank drained a net CNY 100bn via OMO's, after a CNY 78bn drain yesterday, despite the mini taper tantrum seen in Chinese assets following the unexpected drain yesterday.
• Markets look ahead to Chinese industrial profits data, German GfK consumer confidence, US durable goods orders and several ECB speeches including Lane and Villeroy.