Initial Risk-Off Impulse Sets Tone

Initial risk-off impetus set the tone for G10 FX space at the start of the week, even as e-minis recouped losses. A supply-driven slide in oil prices and deepening lockdowns across mainland Europe & the UK knocked risk on its head as markets re-opened, with commodity-tied FX landing at the bottom of the G10 pile. The likes of AUD, NZD, CAD & NOK remain the worst performers in the space, while safe havens USD, JPY & CHF firmed up. Data releases out of core Asia-Pac economies provoked little to no reaction, with participants preparing for this week's risks, including the U.S. election & monetary policy decisions from the RBA & FOMC.

• GBP took a hit as PM Johnson announced that England will go into a four-week lockdown this Thursday, which could be extended if health data suggests that the spread of new Covid-19 infection has not been contained. Source reports suggesting that the UK & EU are close to reaching agreement over fishing rights may have provided some relief to the sterling, but were overshadowed by the spectre of impending lockdown.
• CNH edged higher as Chinese Caixin M'fing PMI unexpectedly improved to its best level since 2011. The reaction move was relatively limited, with USD/CNH last sitting ~60 pips worse off.
• KRW resisted early pressure from wider risk aversion, as local Markit M'fing PMI returned into expansion, while trade data from over the weekend showed a continued recovery in daily average exports. BoK Gov Lee said that the central bank will hold a special meeting on Nov 4 to assess the impact of the U.S. election.
• PMI from across the globe will continue to trickle out, drawing attention today. Central bank speaker slate features ECB's Rehn & Mersch.