Commodity FX Pull Back From Highs Amid Moderation In Risk-On Flows

Commodity FX led the way in Asia-Pac trade as reflation trade narrative and optimistic news from the vaccine front continued to do the rounds, boosting risk appetite in the early part of the session. Initial price swings were corrected as the risk-on mood moderated somewhat, but NOK managed to remain atop the G10 pile amid renewed gains in crude oil prices. The two Antipodean currencies firmed up in tandem, each hitting their best levels since 2018 against the U.S. dollar, before they pulled back from respective highs.

• NZD caught a fresh bid as S&P raised New Zealand's credit rating to AA+ from AA (outlook changed to stable from positive), but looked through PM Ardern's announcement that Auckland will move to Covid-19 alert level 1 from level 2 at midnight. The kiwi narrowly outperformed its cousin from across the Tasman, as Fitch affirmed Australia at AAA with a negative outlook.
• Safe havens recovered from worst levels, but remained at bay with JPY & CHF lagging their G10 peers as we head for the London session. USD/JPY snapped its three-day losing streak and ground higher but rejected the prior intraday high.
• The PBOC fixed the USD/CNY mid-point at CNY6.4563, around 10 pips above sell side estimates, after delivering an expected decision to leave LPR settings unchanged over the weekend. USD/CNH wavered around neutral levels.
• Focus today falls on German Ifo Survey as well as speeches from Fed's Kaplan & Bowman, ECB's Lagarde, BoE's Vlieghe and Riksbank's Floden.