USD Unwinds Most Of Monday's Gains On China Optimism

The BBDXY has given up a good chunk of its gains from Monday's session. The index was last -0.50% and sitting just under 1274.50 (Monday saw a 0.63% gain). Risk appetite has been supported by strong gains across China/HK equities, which has weighed on the USDs safe haven appeal.

• A slight downtick in Covid cases, no escalation in social unrest and a press briefing later today from the China National Health Commission (NHC) is spurring re-opening hopes. Our first instinct is that today would be far too soon to announce anything like a mass re-opening in China, but markets are trading like there will be at least another tweak to the country’s COVID restrictions.
• High beta plays AUD, NZD and NOK lead the moves higher. AUD/USD is back above 0.6700, +0.80% for the session, while NZD has lagged somewhat this afternoon, last above 0.6200. Note CNH is up over 1%, with USD/CNH sub 7.1700.
• JPY is a lagged, with USD/JPY down 0.30% and the pair last around 138.50. EUR and GBP are up around 0.50% against the USD.
• Coming up is the German CPI for November, while in the US house price data and US November consumer confidence are due.