RBC Capital Markets

Day ahead: UK February labour market data (see GBP) are the only first‐tier release in the European and North American sessions. Overnight tonight we have Q1 CPI data in New Zealand and March retail sales in Australia. The Q1 earnings season broadens out to include non‐financials this week (J&J, P&G, Netflix today).

AUD: RBA meeting minutes contained a number of familiar themes and limited new news. However, while the key paragraph on 3y YCC was largely unchanged, the final sentence on considering whether to roll the target bond to the Nov‐24s from the current Apr‐24s gives greater weight to recent strong labour market data. Our economists think the risk of extension is falling, though they still favour and increase in the size of the QE programme.

Citi

The USD has continued to weaken overnight, with little in the way of concrete headlines to explain the move in Asia. Instead we highlight technical and quant signals pointing to further USD downside, with leveraged players also flipping short USDs last week. Note too, that bigger picture, CitiFX Strategy thinks that upside in US yields and UST vol will remain contained, suggesting further USD weakness ahead.

Looking at data overnight/today, AUD RBA minutes were a non-event, while GBP looks ahead to employment data. In EM, IDR awaits a BI rate decision (hold) while TWD looks to trade data.

Monday’s USD sell-off has picked up steam in Asia hours despite no specific triggers. Nonetheless, this comes in line with CitiFX Strategy’s view that US rates upside and volatility is contained, which also suggests that the USD is likely to weaken further and broadly, even if not linearly.

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