USD Back From Best Levels On Yield Differentials, NOK Continues to Outperform

Unfavourable moves in USD differentials vs. EGBs and Gilts mean that the broader USD has given back a fair chunk of the (limited) overnight uptick in the BBDXY, leaving the measure ~0.1% higher on the day. Equity market moves have also factored in, with both the Euro STOXX 50 and S&P 500 futures operating off worst levels.

• The NOK remains the G10 FX outperformer given the previously covered firmer than expected Norwegian CPI release, although a downtick in crude oil may be a limiting factor at the margin.
• Elsewhere, the SEK is little changed vs. the USD, probably being dragged along by the NOK, with the Riksbank meeting minutes providing little in the way of actionable headlines.
• The Antipodeans find themselves at the other end of the table given the downtick in e-minis (vs. settlement) and previously covered deflation/domestic demand worry in China (Chinese stimulus hopes remain evident, although the risk there seems to be tilted towards under delivery via relatively targeted moves).
• Macro headline/data flow remains light thus far, with participants focused on the impending Fed. ECB & BoE speak.