USD Firms, NZD Can't Sustain Post CPI Bounce

USD indices are slightly higher today. The BBDXY was last just above the 1204.6 level, close to 0.15% firmer for the Wednesday session so far. We aren't too far away from session highs near 1205. AUD and JPY have been the weakest performers within the G10 space, with some negative spill over evident from higher USD/CNH levels (back above 7.2150).

• The early focus though was on NZD, which rallied to a high of 0.6315 on the back of a stronger than expected Q2 CPI print (1.1% q/q, versus 0.9% forecast). The outcome was in line with the RBNZ's q/q projections though. A recovery in broader USD sentiment trimmed NZD gains, while softer HK/China equity sentiment hasn't helped either. NZD/USD is now back to 0.6260/65, around Tuesday session lows.
• The Kiwi has still outperformed on crosses, but AUD/NZD sits back at 1.0835/40, down from early session highs near 1.0865.
• AUD/USD is back to 0.6780, around session lows currently, -0.45% weaker versus NY closing levels. Some weakness in metal commodity prices, with iron ore slipping back to $112/ton is not helping amid renewed China growth concerns.
• USD/JPY is close to fresh week to date highs, last in the 139.30/35 region. Some carry over from dovish Ueda rhetoric is likely weighing on yen, along with the aforementioned CNH weakness.
• US yields are lower, led by the front-end, which is 2-2.5bps weaker in the 2-5y space. This hasn't impacted USD sentiment though.
• Looking ahead, we have UK CPI on tap early doors in London. EU CPI data prints later on (final read for June), then in the US session, housing starts are out.