Risk Tone Reverses

The greenback showed some weakness early on, but this was reversed along with risk tone as China state funds intervened in equity markets to stem losses.

• AUD has moved between gains and losses, the pair last up 15 pips at 0.7664. Data earlier in the session showed NAB Business Conditions rose to 15 in February, from 9 previously. The rate managed to shake off weaker iron ore futures to post gains. NZD struggled more than its antipodean counterpart, down 5 pips at 0.7123.
• PBOC fixed USD/CNY at 6.5338, just 2 pips above sell side estimates, offshore yuan weakened at the start of the session, USD/CNH touching 6.5515 as Chinese equity markets dropped. The yuan reversed its fortunes though, strengthening as equity markets reversed losses on touted intervention from China state funds. Offshore yuan is down some 125 pips, USD/CNH last at 6.5388, but still holding most of the gain from yesterday.
• JPY has weakened, data earlier in the session showed final Q4 GDP at 2.8% Q/Q, lower than the preliminary 3.0%, annualized GDP fell to 11.7% from 12.7%. Earnings data showed average wages fell 0.8% y/y in January, recording a 10th straight drop following a 3.0% fall in December. Real wages also remained in negative territory. Base wages, the key to a steady recovery in cash earnings, rose 0.3% y/y after falling 0.1% in December for the first rise in three months. USD/JPY has moved above 109.00, contacts noting USD/JPY demand from Japanese banks.