Risk Retreats After Sino-Australian Tension Resurfaces

Headlines noting that China's NDRC has halted activities under the China-Australia economic dialogue indefinitely caught many off guard, with one local AUD participant/strategist in Australia signalling that it is "fair to say most of us have forgotten about such a thing." The news delivered a blow to the Antipodeans, sending them to the bottom of G10 pile. Liquidity picked up as trading activity in China, Japan and South Korea resumed after holidays.

• U.S. dollar picked up a bid as the Sino-Australian headlines crossed. The greenback jumped to the top of G10 scoreboard, albeit the DXY failed to break above yesterday's high. The upswing in the dollar index coincided with a downtick in e-mini futures.
• The first post-holiday PBOC fix was closely watched and offshore yuan strengthened as the central USD/CNY mid-point was set 18 pips shy of sell-side estimates. USD/CNH moved away from session lows but still sits ~60 pips lower on the day.
• The BoE & Norges Bank will announce their MonPol decisions today. Speeches are awaited from Fed's Williams, Kaplan & Mester, ECB's Lagarde, de Guindos & Schnabel, RBA's Debelle & Norges Bank's Olsen. Data docket features U.S. initial jobless claims, EZ retail sales, German factory orders & Norwegian industrial output.