USD Lagging Ahead Of CPI Print

USD indices remain on the backfoot ahead of the US CPI print due later. The BBDXY index has tested sub 1235, fresh lows since the first half of June 2022, before finding some support. The DXY is near the 103.00 level. JPY gains have been the major driver of dollar underperformance, although AUD is also seeing some outperformance.

• Cross-asset signals are fairly muted, with US equity futures slightly higher (+0.10%), while regional equities mixed. Commodities are mostly holding recent gains. US cash Tsy yields are down, again led at the back end (30y off -2.8bps, 10yr -1.5bps).
• These moves have likely helped yen, although fresh speculation ahead of next week's BoJ meeting is a bigger driver. Early headlines that the central bank would review the side effects of massive monetary policy stimulus aided yen. We currently sit just above lows for the pair, last around 131.45/50 (low was 131.37).
• AUD/USD is holding close to 0.6920, close to recent highs. The Nov trade figures were slightly better than expected from a surplus standpoint. The currency has largely shrugged off waning yield spreads, the 2yr AU-US back out to -106bps.
• NZD/USD is still lagging somewhat, last around 0.6375.