Some Caution Noted

The BBDXY is pretty much flat on the day, although it has threatened to break its Friday peak on a couple of occasions, drawing support from the Asia-Pac reaction to Friday’s UoM sentiment survey, softer than expected Y/Y Chinese GDP readings and a related downtick in Chinese equities.

• When it comes to wider G10 FX trade it is the JPY & CHF that sit atop the performance table thus far on Monday, with the apprehensive risk appetite stemming from the Chinese GDP data and U.S. Tsy Secretary Yellen pushing back against the idea of a rollback of trade restrictions on China noted.
• The above dynamics leave the AUD & NZD at the other end of the pile, owing to their sensitivity to China & high beta status.
• USD/CNH is back above CNH7.1800 after getting close to a test of the CNH7.1200 level late last week.
• A holiday in Japan and adverse weather conditions in Hong Kong (resulting in the closure of the HKEX) will have hampered volume/activity in Asia-Pac hours.
• U.S. empire manufacturing and the latest raft of ECB speak headline a limited macro docket on Monday.