Risk-On Flows Evident, AUD Takes Hit From RBA Announcement

AUD crept higher in the lead-up to the RBA's monetary policy decision, but reversed course after the Reserve Bank announced a A$100mn 6-month extension of its bond buying scheme from mid-April. AUD/USD trimmed the bulk of its earlier gains, but remained in positive territory amid broader greenback sales. Worth noting that A$1.2bn worth of AUD puts with strikes at $0.7600 roll off at the NY cut today, with the spot currently trading around $0.7625. AUD/NZD swung to a loss in the wake of the RBA's announcement and seems poised to extend its losing streak to three consecutive days.

• Safe haven currencies faced some headwinds as regional equity benchmarks flashed green, while e-minis climbed through the session. The likes of USD, JPY & CHF landed towards the bottom end of the G10 scoreboard. The DXY pulled back from three-week highs.
• NOK outperformed in the G10 basked, drawing support from firmer crude oil prices.
• EUR/USD edged higher on the back of a softer U.S. dollar, despite continued political uncertainty in Italy, where talks between former ruling coalition partiers have seemingly stalled. Lower house speaker responsible for mediating the negotiations reports back to Pres Mattarella today.
• The PBoC injected funds to help alleviate the liquidity crunch and a senior Chinese diplomat called for a more constructive relationship with the U.S., lending further support to broader risk appetite. Spot USD/CNH slipped even as the PBoC fixed USD/CNY at CNY6.4736, another fix above sell-side estimates, bringing total misses in Feb to +33 pips (Jan +284 pips, Dec +133 pips).
• The economic docket is fairly thin today, focus turns to advance GDP data from the EZ & Italy, flash French CPI and comments from Riksbank's Ingves, ECB's de Cos as well as Fed's Kaplan & Mester.