Risk Off Tone Evident Amid Weaker China/HK Equities, Yen Outperforms

The Friday risk tone has soured notably in the last part of trade. HK/China equity sentiment opened up weaker, amid earnings headlines and concerns around further US restrictions. The HSI remains weaker by more than 2.4%, the CSI 300 down over 1%.

• The break higher in USD/CNY onshore spot above 7.2000 has added to broader USD gains, both in terms of USD/Asia pairs and against the majors. USD/CNH is near 7.2500, while the won has lost more than 1% in spot terms. The BBDXY index is closing back in on pre FOMC levels, last at 1243.70.
• Yen is outperforming though, likely aided by the negative equity tone (US equity futures are back in the red). USD/JPY got to highs earlier of 151.86, so just short of the Nov 2023 high of 151.91, but we now sit back at 151.50/55.
• BoJ Governor Ueda is before parliament at the moment, stating that the central bank will eventually scale back its bond purchases. This is unlikely to be in the near term as Ueda stated the central bank will assess the market reaction to the recent policy shift. At the lunch break, JGB futures were down -.08 to 145.33.
• US yields are mostly tracking lower at this stage, but this isn't impacting the USD negatively (outside of yen gains).
• AUD is the weakest performer in the G10 space, last at 0.6535, down 0.55%, NZD/USD is off 0.45% to sub 0.6020, to fresh YTD lows.