PBoC Reluctant To Arrest Yuan Strengthening

China's return to work after an eight-day hiatus brought a surge in the redback, as onshore yuan played catch-up to the recent gains in its offshore twin, while the PBoC set its central USD/CNY mid-point lower than expected, failing to signal any sense of urgency to arrest currency appreciation. USD/CNY and USD/CNH both plunged to their worst levels since Apr 2019, with the latter pair punching through support from from Oct 5 cycle low and narrowing in on the psychological CNH6.7 figure.

• Renewed yuan purchases undermined the greenback, which had already struggled amid upticks in all three major e-mini contracts, aided by the White House's openness to a more comprehensive stimulus package. The DXY slid through yesterday's low, with USD underperforming all of its G10 peers.
• NZD led gains among majors, as participants seemed happy to leave yesterday's dovish RBNZ messaging behind. AUD/NZD pulled back onto its 50-DMA breached during yesterday's rally, with BBG trader sources citing kiwi demand from leveraged funds. CAD failed to latch onto the general strength of commodity-tied FX space and retreated, unlike NZD, AUD or NOK.
• UK monthly activity data, Canadian labour market report, French & Italian industrial production figures, Norwegian CPI as well as comments from Fed's Barkin & BoE's Haldane take focus today.