UK Fiscal Headlines, PBOC Comments Prop Up Risk Sentiment

Sterling was volatile amid reports surrounding UK Cll'r Kwarteng's early departure from the annual IMF meetings and suggestions that the government may rip up parts of its controversial fiscal plans. There was talk of officials drafting options for the Truss/Kwarteng tandem, with many flagging the potential for a U-turn on the pledge to cancel a scheduled corporation tax hike.

• GBP/USD showed a delayed reaction to those headlines, posting a ~60 pip spike at one point to print session highs at $1.1366. The leap higher in cable sapped strength from the broader USD, with the BBDXY still lower on the day, even as GBP/USD gradually erased gains. Reminder that the BoE's emergency bond-buying scheme is set to expire on Friday.
• Comments from PBOC Gov Yi lent further support to risk sentiment, as the official vowed to promote increased lending to critical sectors. China's inflation data were marginally weaker than expected, causing no material perturbations in the FX markets.
• The yen was subject to renewed selling pressure as participants shied away from safe havens. USD/JPY rejected intraday resistance from Y147.45/46 on two approaches, failing to re-test yesterday's 30-year high of Y147.67.
• Japanese officials chose to keep the market in the dark about their potential intervention on Thursday. FinMin Suzuki stuck to his usual script, noting that officials are monitoring markets with a high sense of urgency and stand ready to take appropriate responses.
• The Antipodeans led high-betas higher amid better risk appetite. The Aussie dollar led gains, with AUD/NZD now poised to snap a four-day losing streak. Oil-tied NOK an CAD were also firmer.
• Focus will turn to U.S. retail sales & preliminary results of Uni. of Mich. survey. Central bank speaker slate features Fed's George, Cook and Waller, ECB's Holzmann, BoC's Macklem & Riksbank's Ohlsson.