USD Can't Sustain Early Gains, NZD Underperforms

The BBDXY tracked higher in initial trade, as markets extended the USD's gains that came post the CPI print in Thursday NY trade. However, the BBDXY couldn't sustain a move above 1233.40, the index last around 1232.90, little changed for the session. Japan onshore markets have been closed today, which has meant no cash US Tsy trading. US bond futures have been range bound, unable to test late Thursday session lows. Equity futures opened higher, but are now back close to flat.

• USD/JPY attempted an early move towards 145.00 but this ran out of steam quickly, an option expiry later today in NY with a 145.00 strike may have been a factor. USD/JPY, last tracked around 144.65/70, slightly below Thursday closing levels in NY.
• NZD has underperformed at the margins. We had softer data on the manufacturing PMI front, which dipped further into contractionary territory (46.3), while food prices fell 0.5% m/m (the first fall since Feb 2022). The pair last tracked near 0.6010, but support appears evident ahead of the 0.6000 figure level, which is close to multi-month lows.
• AUD/USD was softer in early trade, but didn't test sub 0.6500. The pair was last 0.6520/25. RBA Governor Lowe testified before parliament, reiterating many previous well documented points. Household consumption, services inflation and the China slowdown are RBA watch points. AUD/NZD has tracked higher today, last near 1.0850.
• EUR/USD has been steady, unable to move back above the 1.1000 level.
• Looking ahead, we get UK Q2 GDP printing, while in the US the July PPI and August U.of Mich sentiment readings are on tap.