USD Benefits From Higher Tsy Yields

An uptick in U.S. Tsy yields has allowed the broader DXY to firm in G10 FX trade.

• The greenback is outperforming all of its G10 FX counterparts, with the Aussie & kiwi finding themselves at the bottom of the G10 FX table as questions re: the health of the Chinese economy continue to circle, weighing on the China-sensitive Antipodean currencies.
• On that front, Q1 Chinese GDP data topped exp., although monthly economic activity data for March was a little more mixed, with retail sales falling by a larger than expected clip (more worry is evident on that front owing to widening localised COVID lockdowns), unemployment unexpectedly ticking higher and industrial production beating expectations. NZD/USD moved to the lowest levels observed since late Feb, while AUD/USD softened to levels not seen since 17 March.
• USD/CNH stuck to a very narrow ~100 pip range, failing to really react to the data, news that Shanghai has started to sketch out the path away from mobility restrictions and after the PBoC delivered a smaller than expected RRR cut on Friday.
• Higher crude prices and Tsy yields saw USD/JPY print a fresh cycle high of Y126.79 before the combination of Tokyo fix-related flows, Japanese Finance Minister Suzuki reiterating the need for vigilance when it comes to monitoring the FX rate/presenting some indecision when it came to the net impact of the recent JPY weakness and a more guarded tone from BoJ Governor Kuroda re: JPY weakness, with a particular focus on the speed of moves and impact that such moves can have on different sectors of the economy (although he did ultimately reaffirm the overall net positive impact of a weaker JPY on the Japanese economy, noting that it is still “basically positive overall”), combining to push USD/JPY to session lows of Y126.25, before the cross rebounded to last deal around Y126.65.
• NAHB Housing data out of the U.S. & Fedspeak from St. Louis Fed President Bullard (’22 voter) headline the docket on Monday. A reminder that holidays in London, Europe, Australia & Hong Kong will thin out wider liquidity.