USD/JPY Trims Post-CPI Slump, COVID-19 Worry Weighs On Yuan

Spot USD/JPY has staged a relief rally as Asia-Pac participants went online, after posting its largest one-day slump since 2016 in reaction to the larger than expected moderation in U.S. consumer inflation on Thursday. The data inspired withdrawal of hawkish Fed bets, which prompted U.S./Japan yield spreads to tighten by decent margins. This sent USD/JPY below its 100-DMA for the first time in more than a year, but the pair failed to close below that moving average, and is chewing into Thursday's losses as we type.

• USD/JPY has added ~1 figure ahead of the Tokyo fix, briefly showing above the Y142.00 mark, with the two sides of the pair sitting on the opposite ends of the G10 pile. Cash Tsys are closed owing to a public holiday in the U.S.
• Japanese FinMin Suzuki vowed to continue monitoring FX moves with high sense of urgency and take appropriate measures if necessary, reaffirming preference for stealth interventions through a refusal to comment on whether the authorities stepped in.
• Spot USD/CNH has also found poise and last deals ~120 pips better off, after a failure to test its 50-DMA on Thursday. The PBOC will announce its USD/CNY mid-point fixing shortly. Offshore yuan may have been pressured by the latest round of COVID-19 numbers, which showed Beijing's tally jump to the highest level in over a year.
• On tap today are UK GDP & activity indicators, final German CPI & flash U.S. Uni. of Mich. Sentiment. Central bank speaker slate features ECB's Holzmann, Panetta, de Guindos, Lane, de Cos & Centeno, as well as BoE's Haskel & Tenreyro.