Risk Switch In G10 FX Space Still Flicked To Off, But Yen Bucks The Trend

Risk sensitive currencies remained under pressure, as concerns over the rapid spread of the Delta variant in Asia failed to dissipate, despite Pfizer's plan to seek emergency authorisation for a third booster dose of their Covid-19 vaccine. The greenback outperformed in G10 FX space, closely followed by the Swiss franc.

• NZD/USD tested a key support from Jun 18 low of $0.6923, with the kiwi sitting close to the lower end of the G10 scoreboard throughout the Asia-Pac session. BBG cited a trader source, who flagged AUD/NZD purchases following yesterday's speech from RBA Gov Lowe, which may have added some pressure to the kiwi.
• NZD/USD 1-week implied volatility extended the its sharp upswing to four days in a row, showing at the highest point since Mar 24. The move originated after the release of the upbeat NZIER QSBO survey this week, with participants assessing its ramifications for next week's RBNZ policy meeting.
• The yen failed to benefit from the broader risk-off impetus and USD/JPY edged towards the Y110.00 mark. On Thursday, Japan confirmed that Olympic events in Tokyo and neighbouring prefectures will be held without spectators.
• Offshore yuan gained, despite a marginal miss in China's headline CPI, which slowed to +1.1% Y/Y in June from +1.3% previously, as well as simmering Sino-U.S. tensions over Xinjiang.
• The account of the latest ECB MonPol Meeting and monthly UK economic activity indicators take focus in Europe, alongside comments from BoE's Bailey and ECB's Lagarde, de Cos & Rehn. Canada's labour market report will be eyed later in the day.