JPY Atop G10 Table In Asia, But Back From Best Levels

An uptick in Tsy yields eventually fed through into the USD, allowing the DXY to erase its early downtick, but moves were not uniform across the G10 FX sphere.

• The JPY still sits atop the G10 FX table as we move towards London hours, while the AUD is the worst performer, with talk of Tokyo based firms repatriating JPY after AUD/JPY firmed on Wednesday. Speculation surrounding leveraged account selling of the rate also did the rounds.
• The early move lower in JPY crosses was relatively large given the lack of meaningful headline flow observed, and particularly with U.S. Tsy yields nudging higher. USD/JPY has since retraced, dealing ~80 pips off lows, ~15 pips softer on the day.
• AUD/USD sits 25 pips lower, consolidating the bulk of yesterday’s gains
• Elsewhere, USD/CNH edged back towards its multi-month trough, with continued focus on supportive Chinese policy settings (on both the fiscal and monetary fronts, with the PBoC reiterating the need for targeted, prudent monetary policy settings) as China looks to work its way through well-documented economic headwinds. We also saw confirmation of the long-touted HK-China border reopening. HK & mainland equity benchmarks are over 1% firmer on the day, although the Hang Seng has pulled back from early highs. Pre-Lunar NY seasonals also favour yuan strength owing to onshore cash flow needs.
• U.S. ADP employment data crosses Thursday but the focus will quickly shift to Friday's release of Eurozone inflation data & U.S. NFP print. Thursday’s central bank speaker slate includes comments from Fed’s Bullard, Harker & Bostic, as well as Norges Bank Governor Bache.