USD/JPY Shrugs Off Step Up In FX Rhetoric, Higher CNY Fixing Weighs On Broader USD Sentiment

The BBDXY index sits lower for the Monday session as we approach the London/EU cross over, last near 1245.15, off a little over 0.10%. We are up from earlier lows of 1243.55, which came post the stronger than expected CNY fixing.

• The CNY fixing was the main focus point today, as markets assessed whether we would see a run of further yuan weakness. In the event the fixing was set stronger than expected (back sub 7.1000), which has seen USD/CNY largely reverse Friday's gains.
• Prior to this we had a step up in official rhetoric from Japan's Chief currency diplomat Kanda. He described recent FX moves as being speculative and that the authorities wouldn't hesitate to act. Still, the pair could test Friday lows around 151.00 during this period or post the stronger CNY fixing. We track near 151.25/30 in recent trade, only marginally stronger in yen terms.
• The BoJ minutes for the Jan meeting were released, but have largely been superseded by last week's BoJ meeting, which ended NIRP.
• AUD/USD is higher, last near 0.625/30, nearly 0.20% firmer. Earlier highs were at 0.6544 as the currency benefited from a stronger yuan and a more positive HK/China equity tone.
• NZD/USD has lagged at the margins, last near 0.6000, up from fresh YTD lows of 0.5986.
• US yields have recovered from earlier lows, likely aiding the USD regaining some ground from earlier lows.
• Looking ahead, we have Fed speak (including Bostic again, along with Goolsbee and Cook) and some US data (new home sales and Dallas Fed Manufacturing). The BoE's Mann also speaks.