Yen Loses Shine Amid Better Risk Backdrop, Kiwi Slips Post-RBNZ

Light risk-on flows took hold as the Asia-Pac session progressed, with the regional equity space supported by Taiwan's announcement that it will activate its stock stabilisation fund. The lack of new COVID-19 cases outside of quarantine facilities in Shanghai may have also helped prop up market sentiment.

• The kiwi dollar underperformed the likes of AUD and CAD which capitalised on risk-on impetus, as participants parsed the RBNZ's monetary policy review. The Reserve Bank delivered a widely expected 50bp rate rise but signalled marginally deeper concern about economic headwinds and said it was comfortable with the current OCR forecast, with NZ 2-Year swaps ticking lower as a result.
• Spot USD/JPY turned bid over the Tokyo fix, running as high as to Y137.25 before trimming gains. The yen remains the worst G10 performer, with U.S./Japan 10-Year yield spread widening a tad.
• The greenback lost its initial allure, even as U.S. Tsys cheapened across the curve. That said, the dollar index (BBDXY) sits within touching distance from two-year highs, while EUR/USD oscillates ~35 pips above parity, as focus turns to U.S. CPI data, due for release in NY hours.
• Other points of note today include a rate decision from Canada's central bank, final German & French CPIs, as well as comments from Fed's Waller, ECB's Centeno & BoC's Macklem.