Underwhelming Chinese Data Weighs On Risk

Participants shied away from risk after Chinese activity indicators undershot forecasts. This amplified selling pressure to offshore yuan, which had earlier suffered as the PBOC unexpectedly cut the interest rates applied to its 1-Year MLF and 7-Day Reverse Repo operations.

• The BBDXY index followed USD/CNH on two legs higher in response to PBOC action/Chinese data. The greenback was the second-best performer in the G10 basket, with U.S. Tsy yields little changed as we type.
• The yen remained the frontrunner after good demand for the Japanese currency emerged into the Tokyo fix. USD/JPY moved away from its session lows on the back of greenback purchases linked to the Chinese catalysts.
• Regional risk barometer AUD/JPY gave away ~50 pips as Friday's gains virtually evaporated, with Antipodean currencies pacing losses.
• U.S. Empire State Manufacturing Survey will take focus later in the day.