USD Index To Fresh Highs, AUD & NZD Hit BY Hong Kong Equity Weakness

The USD has remained on the front foot in the first part of Tuesday trade. The BBDXY hitting fresh cyclical highs above 1277. This is +0.20% above NY closing levels on Monday.

• Early impetus came from a further rise in US yields, as Cleveland Fed President Mester stated another rate hike may be needed. US yields hold higher, but are away from session highs. The 10yr yield is near 4.69%.
• Weaker regional equity sentiment has weighed noticeably on the antipodean currencies. NZD/USD initially led moves lower, the pair last near 0.5910, 0.60% weaker for the session.
• As the afternoon session has progressed, AUD/USD has played catch up to the downside. The pair to fresh 2023 lows, sub 0.6330, which is also off 0.60% (last near 0.6325). The spill over from weaker HK equities (which has led by renewed China property concerns) has been evident in terms of lower iron ore and copper prices.
• As widely expect the RBA held rates at 4.10%, with a largely unchanged statement. This didn't impact AUD though.
• JPY is outperforming modestly. USD/JPY sits at 149.85 currently, little changed for the session. Further verbal jawboning was evident from the Japan FinMin but the rhetoric on FX didn't appear as an escalation compared with recent commentary.
• EUR/USD is down further last near 1.0460.
• Looking ahead, we have the ECB's Lane speaking, then later on, Fed’s Bostic speaks on the economic outlook and inflation. On the data front, there are US JOLTS job openings for August, which are expected to be steady.