Risk-Off Flows Restart After Wednesday's Pause

Early Asia-Pac trade saw a reversal of Wednesday's risk rebound amid suspected profit taking by regional players. With the BoE's bond-buying intervention already in the books, concerns over the UK government's fiscal plans and the prospect of further aggressive Fed tightening resurfaced. The re-established negative risk tone remained firm through the session, with wires carrying little to alter that trend.

• The greenback outperformed all its G10 peers, with upticks in U.S. Tsy yields facilitating this dynamic. E-minis operated in the red, generating demand for safe haven currencies, with JPY and CHF strengthening alongside USD as a result.
• USD/JPY added ~30 pips, even as one-month option skews dropped. Slight widening in U.S./Japan 10-year yield spread helped push the rate higher.
• Cable gave away nearly 100 pips as the sterling came under renewed pressure linked to Chancellor Kwarteng's sweeping tax reduction plans.
• USD/CNH advanced, then caught a breather as the PBOC pushed its fixing error back out to -729 pips, but promptly resumed gains. The rate's upswing was capped at the CNH7.2 mark.
• Yuan weakness created unfavourable backdrop for the Antipodeans, with the kiwi pacing losses in G10 FX space. The uptick in AUD/NZD was out of sync with the move lower in AU/NZ 2-year swap spread.
• On the global data docket we have U.S. initial jobless claims and third reading of Q2 GDP, German consumer inflation figures and Canadian GDP. Another hefty round of central bank rhetoric is inbound, with Fed, ECB, BoE and Riksbank members due to speak.