Risk On Rules Again

The pervasive risk on tone continues in Asia on Tuesday, volumes remain subdued with several markets, including China, yet to return from the LNY break.

• AUD is higher, spot AUD/USD briefly touched 0.7795 in the wake of RBA minutes. The minutes showed the RBA intends to keep ultra-low interest rates and bond buying in place for as long as it necessary to get inflation and wages growth sustainably higher, and slower unemployment. The bank did not comment on additional stimulus, or the planned withdrawal of certain stimulus measures in March.
• NZD is also higher, REINZ house sales rose 3.2% Y/Y in Jan after rising as much as 36.6% in Dec, while FinMin Robertson said that the government will loosen requirements for one of its support schemes for businesses, the Resurgence Support Payment, if the current Covid-19 restrictions are extended.
• JPY pairs have softened as the risk on tone takes hold in Asia, BOJ Gov Kuroda was on the wires saying the BoJ will continue its current policy to support the economy. Kyodo sources suggested that PM Suga counts on a speedy rollout of the vaccine to provide him a political "lifeline" amid dwindling public support for his cabinet.
• Offshore yuan continues to strengthen, USD/CNH approaching the 6.40 handle and making multi-year highs. We have too look back mid-2018 for the last time the rate was at these levels. GBP continues to rally, cable now consolidating above the 1.39 handle