Sentiment Stays Buoyant With Inflation Musings Front And Centre

The yen extended losses in muted Asia-Pac trade amid a broadly positive showing from regional equity markets, with participants digesting Tuesday's congressional testimony from Fed Chair Powell. Oil-tied CAD and NOK were in demand, building on yesterday's strength, even as crude prices stabilised.

• Market sentiment was further buoyed by Chinese data, which showed that inflation (both CPI and PPI) slowed more than expected into the year-end, opening up space for local policymakers to take more stimulatory steps. Spot USD/CNH fell to a one-week low in reaction to the release.
• The DXY showed at its lowest point since Nov 30, as selling pressure hit the greenback ahead of the release of U.S. CPI. The data will inform the ongoing discussion about the most likely Fed policy tightening path.
• While U.S. inflation data will certainly take centre stage today, it is worth noting that there are speeches coming up from Fed's Kashkari & BoE's Cunliffe.