Risk Aversion Prevails, ECB Decision Eyed

Cautious mood prevailed as participants reassessed economic recovery outlook, with Antipodean currencies bearing the brunt of resultant risk-off flows. That being said, major G10 crosses were happy to hold relatively tight ranges in Asia-Pac hours.

• Traditional safe havens CHF and JPY outperformed at the margin. Japan extended Covid state of emergencies in 19 prefectures including Tokyo and Osaka, as touted in earlier press reports.
• The release of China's inflation data inspired only a limited amount of volatility in USD/CNH, which remained within the confines of yesterday's range. Consumer prices grew slower than forecast, while factory-price inflation proved faster than expected.
• The latest monetary policy decision from the ECB will take focus in European hours, with policymakers likely set to announce a reduction in the PEPP purchase rate.
• U.S. jobless claims and comments from RBA Dep Gov Debelle, BoC Gov Macklem and a number of Fed speakers will also provide some interest.