Forex Today: Broad USD strength returns, EZ CPI & Fed minutes - Key

Once again China economic news dominated Asia this Wednesday, while broad based US dollar demand re-emerged across the fx board. The demand for safe-havens such as the yen, gold etc., took a back seat as sentiment remained upbeat amid higher treasury yields, Asian stocks and oil prices.

Looking into Europe, there are plenty of risk events such as the Euro area final services PMI reports, Eurozone flash CPI estimate and UK construction PMI data. While from the US docket, we have nothing except the much-awaited Dec Fed meeting minutes, which will be published in the American afternoon.

Main topics in Asia

PBOC drains cash, sets Yuan fix at weakest since May 2008

The People’s Bank of China (PBOC) injected tiny CNY 20 billion in reverse repo, but the net drain amounted to CNY 140 billion for the day.

China considers options to support the yuan and curb outflows - BBG

Bloomberg reports latest headlines on the Chinese yuan and ongoing concerns surrounding increased capital outflows, citing that China is said to be considering options to support the yuan and curb capital outflows, including asking SOEs to convert foreign currency into yuan.

BOJ’s Kuroda – Economy at a critical point to end deflation

Bank of Japan (BOJ) governor Kuroda has reiterated this Wednesday morning that the central bank will continue its easing program and that the economy is at a critical point to end deflation.

Nikkei 225 kicks-off 2017 with a bang, up +2%

The Asian equities witnessed full markets today as the Japanese and New Zealand trades return to the desk after the New Year celebrations.

Key focus for the day ahead

GBP/USD finds fresh bids near 1.2220, UK PMI ahead

The GBP/USD pair found some support near 1.2220 region, and from there attempts another run towards the mid-point of 1.22 handle, as focus now remains on the UK construction sector activity report due later in the European session.

Eurozone inflation to pop up to 1.1% y/y in December - TDS

Analysts at TDS are looking for Eurozone inflation to pop up to 1.1% y/y in December, recording a 1-handle for the first time since September 2013.

FOMC minutes preview - Goldman Sachs

Analysts at Goldman Sachs present a brief preview on the minutes of the Fed’s Dec meeting, when the Fed raised interest rates by 25 bps for the second time in almost 10 years.

USD longs edged down, EUR shorts dropped - Rabobank

Research Team at Rabobank lists down the IMM net speculators’ positioning as at 27 December 2016.