Yen Loses Ground Amid Reduced Demand For Safety

The yen snapped its four-day winning streak against the greenback as Japanese markets re-opened after a public holiday amid reduced demand for safe haven currencies. The continued reassessment of risks from the spreading Omicron coronavirus variant took centre stage, as broader headline flow failed to provide any notable catalysts, with North Korea's apparent missile test virtually ignored by the FX space.

• The AUD was among the best performers in G10 FX space. It may have drawn some support from a solid beat in Australian retail sales and an uptick in BBG Commodity Index. Other high-beta currencies such as NOK and CAD also firmed but NZD struggled.
• Offshore yuan garnered some strength, with spot USD/CNH testing yesterday's low, as the DXY traded on a heavier footing. The redback was resilient in light of targeted lockdowns imposed by some Chinese cities.
• The global data docket is fairly light today, with comments coming up from Fed's Mester & George as well as ECB's Kazaks. Joachim Nagel will take over Bundesbank presidency from Jens Weidmann in the presence of ECB Pres Lagarde.