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The
weakness seen in the US dollar extended further during the Asian
session here today. Major FX rates climbed:

• EUR
  hit a 3-month high
• AUD
  & NZD both to 3-month highs also
• GBP
  to a 2-month high
• CNH
  was its strongest since early in August
• Even
  the hapless yen surged, with USD/JPY to a 7-week low. As
  I post USD/JPY is on approach to 147.50.

There
were no fresh catalysts driving the USD lower, the response to
declining US rates continuing.

The
Australian dollar had some idiosyncratic drivers with comments from
Reserve Bank of Australia Governor Bullock as part of a panel
appearance emphasising the concerns at the Bank on high inflation and
the potential for expectations for inflation expectations to adjust
higher. Such concerns were reiterated in the minutes of the RBA’s
November meeting released soon after Bullock spoke. While the minutes
gave the usual nod to ‘data dependence’ regarding future rate
moves the remarks on why the Bank raised rates in November
after
a 4-month pause revealed
a new-found hawkishness:

• the
  increased risks regarding inflation
• to
  prevent inflation expectations rising, even
  modestly
• a
  growing mindset among businesses that cost increases could be passed
  on to customers
• RBA
  forecasts assuming one or two more hikes

The
AUD rose after the minutes were released, but did subside after. This
didn’t last long. The People’s Bank of China set the USD/CNY
reference rate at its strongest for CNY since August 7, and stronger (for CNY) than the estimate for the first time
since July. The People’s Bank of China had been holding the yuan
steady at the reference rate setting around 7.17 for months, despite
the market trading it around 10 big figures higher. The setting at
7.1406 (vs. estimate at 7.1677) is something of a relief for the
Bank.

Equites in mainland China and Hong Kong rose, benefitting from the news that authorities are preparing more funding for a list of 50 real estate developers. If that comes off it should go some way to helping avoid some defaults. Or, that is the hope, at least.

More broadly for equities, the MSCI Asia ex-Japan stock index hit a two-month high.

As a ps. Reserve Bank of Australia Governor Bullock speaks again on Wednesday evening Sydney time (see bullets above).

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• Source: https://www.forexlive.com/news/forexlive-asia-pacific-fx-news-wrap-usd-index-hits-a-3-month-low-20231121/