Defensive Feel Supports JPY, Sino-Aussie Trade Tensions Weigh On AUD

A sense of caution continued to linger in Asia, as the timezone digested a mix of familiar risks. The rapid resurgence of coronavirus across Europe, Brexit uncertainty and U.S. fiscal stalemate buoyed JPY, the best G10 performer, with a round of purchases seen into the Tokyo fix.

• AUD faltered amid reports noting that Chinese mills have been instructed to stop buying Australian cotton, as Beijing may slap 40% tariffs on the commodity, making shipments unviable.
• A downtick in oil prices applied pressure to NOK & CAD, while preventing any recovery attempts in AUD.
• GBP edged lower as participants awaited UK PM Johnson's decision, whether the UK will abandon Brexit talks with the EU. The announcement is expected today, after the European Council called upon the UK to make concessions, drawing the ire of London's chief negotiator.
• USD/KRW crept higher as South Korean unemployment rose more than expected, which offset potential impact of an optimistic signal sent by local health data. Daily coronavirus case count dipped below 50 for the first time in nearly three weeks.
• Focus turns to EZ trade balance & final CPI, U.S. retail sales, industrial output & flash U. of Mich. Survey as well as comments from Fed's Bullard & Williams and from Riksbank's Ingves.