Broad Risk Themes Drive Price Action Amid Holiday Thinned Session

Broader risk themes of Covid, Brexit and US stimulus packages are the main drivers of price action in a session of thin volumes ahead of the festive break, with little on the economic docket.

• GBP remains in focus as Brexit negotiations go down to the wire. Sterling was boosted in the London evening by reports that progress had been made on the fisheries sticking point, and the Telegraph have reported that MPs have been asked to prepare for an emergency session to vote on a potential Brexit deal, albeit other source reports downplayed Monday's headlines re: progress on fisheries. GBP has corrected the upswing seen late doors on Monday and sits at the bottom of the G10 pile as we type.
• AUD/USD round tripped from intraday lows at 0.7461, hit early on by the dual influence of an uptick in domestic Covid cases and a stronger US dollar. As the vote on the US spending bill drew closer equities recovered and the US dollar pared its gains, which helped AUD/USD to regain ground. Earlier in the session preliminary November retail sales came in at 7.0% against expectations for 2.0%. AUD/USD last down 18 pips at 0.7569. NZD/USD saw a similar round trip, driven by the broader risk backdrop; it last trades down 18 pips at 0.7084.
• USD/JPY swung to an intraday high of 103.89 in Monday's London morning before sliding into the close and more than erasing initial gains as a result. Well-documented risk developments (Covid situation/Brexit) were the main points of note. USD/JPY last at 103.35, up around 3 pips.
• The PBOC fixed USD/CNY at 6.5387, stronger than yesterday's fix of 6.5507. The PBOC injected CNY 120bn of liquidity, bringing total injections this week to CNY 210bn – observers note the central bank are ensuring ample liquidity into year end.
• TWD is the best performer in Asia FX for the second session, while KRW suffers amid a resurgence in Covid cases and THB also languishes.
• Final GDP from the UK, Conf. Board Consumer Confidence, existing home sales & third GDP reading out of the U.S. & Swedish retail sales take focus today.