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Forex news for Asia-Pac trading on Dec 7, 2020:
Markets:
- Australian 10-year yields up 3.5 bps to 1.03%
- Gold flat at $1836
- WTI crude down 21-cents to $46.05
- Nikkei 225 down 0.6%
- JPY leads, NZD lags
Those hoping for a Brexit breakthrough on the weekend were left disappointed and GBP/USD gapped lower to start the week, hitting 1.3360 from 1.3440 on Friday’s close. The other line of thinking was that progress is progress and there was talk of a breakthrough on fishing (later officially denied) and some softening on level playing field. Of course, we’re running into deadlines and Monday will be a big day of talks but dip buyers emerged and bid it back to almost unchanged at one point as the dollar slid. Last down 17 pips with most waiting for some real news before making a move.
The other theme that crept in was US dollar selling. Some of that came from Japanese accounts on a promise of more stimulus to come and the BOJ still buying equities. Given the breakout in the Nikkei, money is coming home. That said, after a strong start in Japanese stocks, they reversed lower in a sign of jitters.
The commodity currencies were quiet but there is some focus on Australian bonds as yields moved up 6.5 bps to the highest since June in the early going. Chinese trade data highlied the ongoing drop in USD/CNY but the import side was a disappointment.
For the euro this week, it will be torn between Brexit headlines, USD flows and a big ECB meeting. The promise of a re-calibration combined with euro strength will be a big test for Lagarde.