Overnight FX Markets:

A BBG report suggesting that China shows increasing reluctance towards a broad trade accord with the U.S. hit the wires early doors, putting the FX space into risk-off mode. The piece cited unnamed officials as saying that Beijing narrowed the range of topics it wants to discuss during the upcoming round of negotiations. USD/CNH reacted with a rally, even as Chinese markets were shut for holidays. Market closures were also observed in Hong Kong and several Australian states, including Sydney/NSW. Meanwhile, a mix of geopolitical tensions, U.S. impeachment saga & Brexit matters further damped sentiment.

Against this backdrop, safe haven FX gained at the cost of the Antipodeans. JPY easily outperformed its G10 peers amid a slide in local equity benchmarks.  

GBP stabilized after testing the water below $1.2300 in early indicative trading as PM Johnson used an op-ed in The Sun on Sunday to reaffirm his pledge to take the UK out of the EU on Halloween, with or without a deal. This was just two days after he promised to obey legislation preventing a no-deal divorce.

FX Related Economic Events:

Monday morning kicks off with the publication of German industrial orders at 0700 BST. In the US the release of consumer credit data will be watched closely at 2000BST.

FX Relative Volatility:

The Street Says:

• Citigroup says that Stocks look cheap relative to bonds worldwide as yield gap widens

• UK assets could lose haven status if country crashes out the EU.

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