Greenback Recovery Fades As Equities Pick Up Late Bid

Despite a solid bounce for the US Dollar during the first half of Monday’s session, a late grind through the highs for major equity indices has taken the shine off the greenback recovery. The USD index (0.35%) does look set to halt its losing streak since the US inflation data last week, however, gains appear much more modest approaching the APAC crossover.

• Early USD strength was largely attributed to comments from Fed's Waller, stating that the FOMC need to see more than just a single lower CPI print before being comfortable that inflation is in decline. Waller added that "The market seems to have gotten way out in front on this".
• The JPY (-0.77%) remains the poorest performer in G10 after a near 200-point USDJPY rally from the open met stiff resistance at the 100-dma of 140.82, the first upside technical level of note. The pair has drifted back below 140.00 throughout US hours in line with the general softer tone for the dollar.
• The extension of equity strength continues to underpin both AUD and NZD, rising around a quarter of a percent. Outperforming is the Chinese Yuan, supported by Chinese authorities moving to support the local property market. Regulators rolled out a series of 16 policy measures, from liquidity support to looser pre-payment conditions. USDCNH (+0.65%) traded within close range of the October lows at 7.0127, extending the three-day rally for the Yuan.
• EURUSD continues to trade with a bid tone and is hovering right at significant resistance between 1.0350-1.0368, the latter level representing the August highs, the best level traded since the July breakdown.
• RBA minutes are due overnight before a set of Chinese activity/employment data. The European session features UK employment figures as well as German ZEW sentiment data. In the US, empire state manufacturing and PPI highlight the docket.