Yuan Surge Helps Risk, Aussie Extends Gains After RBA Minutes

Spot USD/CNH plunged building on its Monday sell-off, which took the rate to its worst levels this year. The rate dived under the CNH6.8000 mark for the first time since May 2019, consolidating losses as China's monthly economic activity indicators topped expectations across the board.

• Yuan appreciation and a sizeable net liquidity injection from the PBoC via its MLF mechanism inspired a recovery in e-minis, which spilled over into the broader FX space. Greenback was pressured toward the bottom of the G10 pile. Sterling followed it lower, after the controversial Internal Market Bill cleared its first hurdle in the House of Commons, albeit initial headlines on the matter saw no immediate market reaction.
• AUD recoiled amid renewed demand for the redback and extended gains as the RBA released minutes from its most recent monetary policy meeting. Policymakers agreed to "continue to consider further monetary measures", but a lack of more colour on those measures may have disappointed some doves. The Aussie is heading for the London session as the best G10 performer.
• Eyes move to UK labour market data, German ZEW Survey, final French and Italian CPIs, Swedish unemployment, Norwegian trade balance, U.S. industrial output & Empire M'fing, as well as comments from ECB's Panetta.