Sentiment Improves On Lead From China/HK Equity Space, USD Struggles Pre-NFP

The greenback sold off as the focus turned from the Fed's most recent monetary policy decision to the U.S. labour market data which will cross the wires after hours. The BBDXY fell 0.5% from Thursday's close, virtually erasing gains registered that day, with short-end U.S. Tsy yields sitting slightly lower.

• Risk sentiment turned positive, with a decent showing from Chinese/HK stocks lending support to the broader equity space. E-minis recouped their initial losses and now operate in the green. There were no obvious catalysts behind that move, outside of continued unverified re-opening speculation.
• Spot USD/CNH tumbled, outpacing losses in the BBDXY index. There was nothing unusual in the PBOC fix to boost the redback, with USD/CNY reference rate set at a new cyclical high and 593 pips below the sell-side estimate.
• G10 crosses traded in a typical risk-on pattern, with high-betas appreciating at the expense of traditional safe havens. The Aussie dollar outperformed on better iron ore prices and firmer commodity complex, leaving its Antipodean cousin NZD behind, out of sync with the move in Australia/New Zealand 2-year swap differential.
• Sterling firmed after cable found a base at $1.1150 and proceeded to chew into the prior trading day's losses. The pound came under pressure Thursday as the BoE delivered a 75bp hike while playing down terminal rate pricing and pointing to a bleak economic outlook.
• Outside of the U.S. NFP report, focus turns to Canadian jobs data, German factory orders, as well as comments from ECB's Lagarde, Nagel & de Guindos, BoE's Pill & Fed's Collins.