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Greenback Holds Modest Losses Amid Risk Bid


Asia-Pac has seen a flurry of risk on sentiment as domestic equity markets open in positive territory, the greenback holds modest losses in the wake of uninspired comments from Yellen.

  • AUD & NZD are both higher, buoyed by positive risk sentiment despite weak consumer confidence data from Australia. AUD has outperformed NZD on the session, playing catch up after outsized NZD gains yesterday in the wake of a strong GDT auction. AUD/USD last up 17 pips at 0.7711, while NZD/USD last up 4 pips at 0.7126.
  • USD/JPY failing to make it over the 104.00 mark, last at 103.85 some 4 pips lower on the session. The Nikkei reported without attribution that the Japanese gov't considers extending its employment subsidy programme through the end of the month following the termination of the state of emergency.
  • The PBOC fixed USD/CNY at 6.4836, around 47 pips lower than yesterday on greenback weakness, but 12 pips higher than sell side estimates. The central bank injected CNY 278bn of liquidity, the second injection after a prolonged drain after year end. The injection comes ahead of LPR rate announcement later today (no change expected) and as participants look to Lunar New Year.
  • Reports hit the wires that the ECB is pursuing a strategy of yield spread control akin to the BoJ and RBA. EUR was unreactive to the news, last up 9 pips at 1.2137.
  • USD/CAD has bucked the trend and move higher, CAD is weaker on concerns for the Keystone XL pipeline with US President Elect Biden widely expected to revoke presidential permission for the venture on his first day in office. Canadian PM Trudeau has said he is trying to convince Biden otherwise, and that cancelling the pipeline would hurt US/Canada relations.
  • Looking ahead UK and German inflation data are due in Wednesday morning and later in the day the BOC announce interest rates.

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