USD Softens, AUD Creeps Higher Ahead Of Central Bank Decisions Next Week

The dollar index (DXY) has turned heavy, moving away from its 103.93 cycle high printed on Thursday. The greenback is the worst performer among major currencies as risk appetite returns to G10 FX space, with U.S. e-mini futures clawing back their opening losses.

• The U.S. dollar is still poised to record its best week this year as today's losses remain fairly modest. Participants look ahead to next week's FOMC meeting, which is expected to see policymakers double down on stimulus withdrawal.
• The RBA Board also meets next week, with latest batch of red-hot inflation data raising the probability of a cash rate hike, despite the ongoing election campaign. The Aussie dollar leads gains in G10 FX space at typing.
• The PBOC delivered the second consecutive pushback against redback depreciation via its daily fixing of yuan reference rate. The mid-point of permitted USD/CNY trading band was set 37 pips below sell-side estimate, which sent spot USD/CNH ~100 pips lower.
• The yen is getting some reprieve in the wake of Thursday's BoJ-inspired rout, with Japanese markets shut in observance of a public holiday. USD/JPY has shed ~35 pips so far, but still holds above the Y130.00 mark.
• U.S. PCE data, MNI Chicago PMI & final U. of Mich. Sentiment, preliminary EZ GDP & CPI, Canadian GDP, Norwegian unemployment & comments from ECB's de Cos take focus from here.