Greenback Puts The Cat Among The Pigeons

The US dollar reversed its fortunes on Thursday, firming against all G10 peers amid higher yields. While USD trading volume was around 25% higher than averages yesterday, it is likely to be a fairly subdued session ahead of US NFP data later today. USD/JPY advanced, the yen was further limited by a positive showing from global equity markets & a meeting of senior off'ls from Japanese MoF, BoJ & FSR, who reiterated that they are keeping an eye on currency strength.

• AUD & NZD both retreated from multi-year highs. AUD seeing some headwinds from lower iron ore exports, but supported by reports that a deal has been reached with Novavax to purchase vaccines.
• In the UK the government announced it will require people entering the country to present a negative COVID-19 test result on arrival starting next week, the decision has been driven as the newly discovered strain continues to worsen the situation in the UK. GBP/USD is on the back foot and underperforming in Asia, last down 25 pips at 1.3544.
• EURUSD also struggled on Thursday amid disappointing Eurozone Nov retail sales. The pair has taken an additional leg lower in Asia, last down 36 pips at 1.2236, the move accelerating after breaching yesterday's lows.
• The PBOC fixed USD/CNY at 6.4708, around 100 pips higher than yesterday driven by US dollar strength. The bank injected CNY 5bn of liquidity, equating to a net drain of CNY 505bn this week.
• The move in the greenback has put some pressure on USD/EM Asia crosses which had seen a relentless rally, the JPMorgan EM Currency Index is headed for its worst day in 3 months.
• Focus moves to U.S. NFP report, German, French & Norwegian industrial output figures, German & French trade data, Canadian & EZ jobs reports as well as comments from Fed Vice Chair Clarida.