USD Up From Earlier Lows, A$ Underperforms

JPY and NZD are modestly higher against the USD, but the rest of the G10 block has struggled as Thursday session has unfolded so far. The BBDXY got close to 1235.7 in earlier trade, but we now sit back near 1237, down only slightly for the session.

• Cross asset focus has been on some modest recover in US yields post Wednesday's slump. Some sell-side names have shifted out their expectation for when the Fed starts cutting. The front end has led the moves, the 2yr up nearly 4bps to 4.24%.
• This has likely kept USD/JPY dips supported to a degree. For this pair, we saw lows of 146.48, but we sit back near 146.75 now. Earlier highs were at 147.08.
• NZD has firmed back to 0.6125, but remains within recent ranges (highs for the session at 0.6141). Some support likely evident from the better US equity futures tone, with Nasdaq futures up close to 0.45%.
• The same can't be said for AUD, last near session lows in the 0.6555/60 region. Earlier highs came close to 0.6580. This underperformance may reflect market pricing around potential RBA cuts in Q2 of this year post yesterday's Q4 CPI update. Metals prices are mixed, with iron ore slightly higher, while copper is down.
• The AUD/NZD cross is back close to 1.0700, near Jan lows.
• EUR/USD has spent most of the session fairly close to 1.0800.
• Looking ahead, there is US Q4 productivity/ULC, jobless claims, January manufacturing PMI/ISM as well as European PMIs and euro area January CPI. The Bank of England meets and is expected to leave rates unchanged. ECB’s Lagarde and Lane make appearances.