Yen Weakness Persists, Pullback In Chinese Equities Weighs On Yuan

The initial reprieve provided to Chinese tech space by a suite of new game approvals issued by Beijing did not last long as local equity benchmarks swung into losses, sending reverberations across financial markets. There were no obvious headline drivers behind the turnaround in Chinese stocks, stoking speculation of possible profit-taking. Offshore yuan dropped to fresh session lows in sync with the equity move, creating a drag on the Antipodeans. Spot USD/CNH remained comfortably within the confines of yesterday's range.

• The PBOC pledged to extend trading hours of China's onshore FX market as part of the broader push to open up domestic financial markets.
• Yen weakness remained a key theme amid firm conviction that the BoJ's ultra-loose monetary policy settings are here to stay. EUR/JPY breached the prior day's high ahead of the Tokyo open, resulting in broader yen weakness and facilitating the eventual upswing in USD/JPY to new two-decade highs. Spot USD/JPY last trades ~50 pips better off, with its 1-month risk reversal consolidating near the highest point since May 10.
• Gains vs. the yuan and yen helped the greenback to cement its position as the best G10 performer, with BBDXY rising steadily as the session progressed.
• Final EZ GDP, German industrial output & U.S. wholesale inventories take focus from here.