USD Firms Modestly, AUD/USD Holding Above 0.6700

The early tone for the USD is firmer, which is a continuation of trends from US trade during last Friday's session. Overall moves are fairly modest, but the USD is up against the majors although the A$ is outperforming slightly. A firmer yield backdrop is helping at the margins, with the US 2yr yield +2bps so far to 4.12%.

• The BBDXY is around 1222.40/50 at present, down slightly from session highs near 1222.90. Friday session highs came in at 1223.60.
• USD/JPY got to a high of 134.00, but now sits slightly lower, last close to the 133.90 level. NZD/USD is down a touch but has found support just below 0.6200. Earlier the March PSI index edged down to 54.4, from 55.8. Food prices rose 0.8%, versus +1.5% in February.
• The A$ is slightly outperforming, last near 0.6710. As noted earlier there is a large option expiry at 0.6700 today.
• US equity futures are higher (+0.20% at this stage), which is likely aiding A$ and NZD .
• Looking ahead, we have the China 1yr MLF rate coming up, with no change expected.