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Offshore Yuan Surges As Asian Holidays Dent Liquidity

FOREX

A combination of an uptick in e-minis and lack of liquidity, owing to public holidays in mainland China, Hong Kong, Taiwan and South Korea, allowed USD/CNH to go offered and bottom out just ~100 pips away from a key cycle low. An equity trading halt in Japan further limited broader market flow, while regional data provoked little to no reaction, which moved focus to improving mood music around U.S. fiscal talks.

  • This generated some modest pressure on safe haven currencies, which lagged all of their G10 peers. USD/JPY faded a gentle uptick into the Tokyo fix, ebbing back towards neutral levels. The DXY tested yesterday's low but failed to breach the level.
  • On today's docket: a flurry of manufacturing PMIs from across the globe, U.S. initial jobless claims and personal income/spending, Canadian building approvals, EZ unemployment and comments from Fed's Williams & Bowman, BoE's Haldane, ECB's Lane & de Cos.

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