USD Softer, As Equity Recovery Continues, But Less Volatility

G10 FX trends have been biased against the USD in the first part of Friday trade, although overall moves have been fairly modest. The BBDXY USD index was last near 1246, off 0.15% for the session.

• USD/JPY was volatile early but couldn't get to fresh weekly highs above 147.90. We topped out at 147.82, but haven't breached 147.00 back on the downside. We were last near 147.10 little changed for the session.
• Yen is tracking 0.40% weaker for the week, with dips in the pair supported since Monday, as global equity sentiment has recovered and market recession fears have eased somewhat.
• The A$ is a touch higher, but isn't racing above 0.6600 (with a large option expiry at this level for NY cut later a potential constraint). Still we were are +1.4% for the week, led by the broader risk recovery and the hawkish RBA backdrop. There isn't much in the way of resistance to 0.6700 (outside of the 50-day EMA near 0.6615).
• NZD/USD has outperformed so far today, up 0.30%, the pair last near 0.6035, fresh highs back to the second half of July.
• US yields sit lower across the benchmarks, led by the front end, with the 2yr near -3bps lower. This unwinds some of Thursday's gains in the yield space.
• Comments from Kansas City President Schmid stated the labour market was cooling but still healthy. If inflation continues to cool Schmid said this would support a policy adjustment.
• Looking ahead, event risks are very light for the offshore session to round out the week. The Canadian labour force survey is likely to be the main data focus point.