The main event overnight was the release of Chinese inflation data, which arrived above expectations. The Yuan strengthened a bit, and the PBoC put today’s USD/CNY mid-point at 6.7157, down 100 pips from yesterday.
While the Asian stock markets are mixed, it was risk-on in FX as the US Dollar retraced slightly and the commodity currencies rallied. AUD/USD rallied from 0.7560 to 0.7610 in Asia and a daily close above 0.76 today would confirm the bottom at 0.7507 and signal that another test of 0.77 is possible in the near-term. NZD/USD rose from 0.7080 to 0.7130 in Asia, while USD/CAD fell from 1.3220 to 1.3185, before bouncing back to 1.32.
The Euro fell in Asia, as the topside was capped at 1.1060 resistance. While it managed to recover from the decline sub-1.10 yesterday, rallies remain rather weak. Same thing can be said for the Pound, which continues to struggle. It was rejected ahead of 1.2280 resistance yesterday and fell back below the big figure in Asia, reaching a low of 1.2195 so far.
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