Risk Aversions Drives USD & JPY Outperformance

Modest risk aversion has been the feature of G10 markets as the Monday Asia Pac session has unfolded. USD trends were mixed in the first part of trade, but equity weakness, particularly in HK/China markets has weighed on AUD and NZD, which have lost ground against the yen.

• Overall moves have been modest though. The BDDXY is slightly above Friday closing levels, last 1224.70/75. Tsy futures have had a slight downside bias, but lows from Friday for TYH4 remain comfortably intact.
• US equity futures started higher, aiding FX risk appetite but now sit modestly lower.
• HK equities sit 2% weaker, the CSI 300 off 0.90% in China. No clear macro catalyst has been evident for the weakness, although tech stocks have a clear drag.
• AUD/USD sits back at 0.6700, close to session lows, while NZD/USD is in the 0.6235/40 region, both marginally weaker for the session.
• Commodities are weaker across the metals space (iron ore & copper), while oil is also down on Saudi price cuts from the weekend.
• JPY has outperformed on the risk averse tone, with USD/JPY back sub 144.50. Earlier highs were above 144.90.
• Looking ahead, German factory orders and Swiss inflation data kick things off later Monday, however, the focus on the docket will be Thursday’s release of US CPI.