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Tight Ranges All Round


A quiet session, US dollar strength has taken a breather in Asia on Tuesday while risk sentiment in the region is mixed. DXY last at 90.576 after closing yesterday at 90.465, the index tread water throughout the session.

  • AUD & NZD are flat. Both initially moved higher alongside equity indices in the region, before gradually giving back. AUD/USD hovers around the key 0.77 level, while NZD/USD has receded from 0.72. Headline flow from the region has been thin, New Zealand did announce plans to tighten coronavirus detection measures for travellers. Both head into the European time zone near session lows.
  • JPY is broadly flat at 104.30. Trade data today from Japan showed November's surplus rose to JPY 616bn against JPY 474bn expected, but lower than the JPY 971 in October. Bank lending data was also released which showed bank lending excluding trusts rose 5.9% in December, in line with October.
  • The PBOC drained a net CNY 5bn from the system today, and fixed USD/CNY at 6.4823 around 59 pips higher than yesterday. The PBOC has weakened the yuan 115 pips so far this week, but USD/CNY bucked the trend and rose against the greenback. President Xi reaffirmed the nation's support for the policy of dual-circulation, as he noted that policymakers want to build a "super-sized" domestic market to ensure a high level of self-sufficiency, which in term supported risk sentiment.
  • EUR slightly lower from the NY close, some chatter of bids surrounding 1.2125 coming from leveraged names. Some sizable put option strikes due today are EUR 1.4bn at 1.2250; EUR 1.4bn at 1.2200 and EUR 1.1bn at 1.2150.

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