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Greenback Tad Firmer, Antipodean Divergence Unfolds

FOREX

The greenback firmed at the margin amid a number of closures across Asian financial centres. Markets were shut in Japan, South Korea, Taiwan and Malaysia, while the U.S. and Canada will also observe public holidays today. The BBDXY wavered, having a look above the prior trading day's high as it printed its best levels since Sep 29, before easing off. Swaps markets are still pricing ~73bp worth of tightening at the next FOMC meeting after the latest round of U.S. labour market data beat expectations.

  • USD/JPY ran as high as to Y145.67 versus the recent cyclical high of Y145.90, with anything above Y145.00 deemed territory of heightened intervention risk. Some participants may have been taking the opportunity provided by a local holiday, as it would be unusual for Japanese officials to step in during a day off.
  • The kiwi dollar tops the G10 pile at typing, while the Aussie is pacing losses. AUD/NZD turned heavy again, as Australia/New Zealand 2-year swap spread faltered, after last week's policy reviews by the Antipodean central banks indicated diverging rate-hike intentions.
  • The weekend brought a suite of risk-negative headlines, including the news that a North Korean nuclear operation unit was exercising under the supervision of Kim Jong-un, as well as a particularly weak Caixin Services PMI released out of China. There was nothing in the way of strong risk-off reaction in G10 FX space.
  • Spot USD/CNH climbed to CNH7.1485 before pulling back into negative territory as China returned from its week-long holiday. The PBOC maintained appreciation bias in its daily yuan fixing for the 28th straight day, albeit the fixing error was narrower than in the recent days.
  • Focus turns to Norwegian CPI inflation, as well as comments from Fed's Brainard & Evans, ECB's Lane, Centeno & de Cos and Riksbank's Ingves, Breman & Ohlsson.
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The greenback firmed at the margin amid a number of closures across Asian financial centres. Markets were shut in Japan, South Korea, Taiwan and Malaysia, while the U.S. and Canada will also observe public holidays today. The BBDXY wavered, having a look above the prior trading day's high as it printed its best levels since Sep 29, before easing off. Swaps markets are still pricing ~73bp worth of tightening at the next FOMC meeting after the latest round of U.S. labour market data beat expectations.

  • USD/JPY ran as high as to Y145.67 versus the recent cyclical high of Y145.90, with anything above Y145.00 deemed territory of heightened intervention risk. Some participants may have been taking the opportunity provided by a local holiday, as it would be unusual for Japanese officials to step in during a day off.
  • The kiwi dollar tops the G10 pile at typing, while the Aussie is pacing losses. AUD/NZD turned heavy again, as Australia/New Zealand 2-year swap spread faltered, after last week's policy reviews by the Antipodean central banks indicated diverging rate-hike intentions.
  • The weekend brought a suite of risk-negative headlines, including the news that a North Korean nuclear operation unit was exercising under the supervision of Kim Jong-un, as well as a particularly weak Caixin Services PMI released out of China. There was nothing in the way of strong risk-off reaction in G10 FX space.
  • Spot USD/CNH climbed to CNH7.1485 before pulling back into negative territory as China returned from its week-long holiday. The PBOC maintained appreciation bias in its daily yuan fixing for the 28th straight day, albeit the fixing error was narrower than in the recent days.
  • Focus turns to Norwegian CPI inflation, as well as comments from Fed's Brainard & Evans, ECB's Lane, Centeno & de Cos and Riksbank's Ingves, Breman & Ohlsson.