Yen Outperforms Safe Haven Peers, Yuan Stages Firm Rebound

The yen was resilient amid risk-on flows elsewhere in the G10 FX space, with the Antipodeans leading gains, while the USD and CHF lagged behind. Spot USD/JPY rejected intraday resistance from Y140.50 and gave back initial gains. Reports of a North Korean missile test involving an ICBM capable of reaching U.S. mainland failed to provoke any broader flip in market sentiment.

• The yen initially found Japan's CPI report uninspiring, albeit garnered some strength as the session progressed. Core consumer inflation picked up to +3.6% Y/Y in October from +3.0% prior, beating the median estimate of +3.5%, which is unlikely to persuade the BoJ to change tack. After the release, central bank Governor Kuroda said that the current inflation situation isn't sustainable.
• USD/CNH snapped a three-day winning streak, potentially on the back of headlines that Hong Kong has approved emergency use of the BioNTech Bivalent vaccine. Bloomberg cited trader sources flagged dollar sales by Chinese state-owned banks as a factor behind yuan rebound.
• Gains for offshore yuan spilled over into the outperforming Antipodeans, prompting them to refresh session highs. AUD/NZD extended its losing streak to five consecutive days.
• Looking ahead, focus on the data front turns to U.S. existing home sales, UK retail sales and Norwegian GDP. Comments are due from ECB's Lagarde, Nagel & Knot, Fed's Collins, as well as BoE's Mann & Haskel.