Risk Aversion Spills Over Into Asia, Greenback Catches Bid

Risk aversion carried over into the Asia-Pac session, with the greenback retaining bid tone as equity markets were flashing red. Headline flow was relatively light, focus remained on some disappointing earnings reports and lingering Covid-19 worry. The DXY crept higher but fell short of attacking the prior intraday high.

• Antipodean currencies led losses in G10 FX space. AUD/USD shed ~40 pips and printed fresh YtD lows as the Aussie landed at the bottom of the pile. NZD/USD narrowed in on its 50-DMA, but failed to test the moving average. AUD/NZD extended its current losing streak, sliding through the 100-DMA.
• USD/JPY rallied further above the Y104.00 mark breached yesterday, but resistance from Jan 11 high/100-DMA at Y104.40/42 proved resilient. The yen struggled to benefit from broader demand for safe haven currencies.
• PBOC fixed USD/CNY at CNY6.4845, another miss lower for sell side estimates and drained CNY 150bn via OMOs, even as overnight repo rates hit multi-year highs. There was a piece in the Securities Journal that posited China will offer additional liquidity ahead of LNY.
• KRW underperformed in Asia after the IMF suggested that South Korea should ramp up fiscal and monetary support, while Samsung's Q4 earnings missed expectations & outlook for Q1 was fairly pessimistic. USD/KRW touched best levels since Nov and charted a double bottom pattern.
• On the radar today: U.S. initial jobless claims, new home sales & advance GDP, EZ sentiment gauges, flash German CPI, Swedish unemployment & retail sales as well as comments from ECB's Schnabel.