JPY Bid On Equity Sell-Off, CHF Buoyed By Referendum Results, GBP Gains On Brexit Sentiment

Initial pressure on safe haven currencies faded away as e-minis and equity benchmarks in Japan, Australia, Hong Kong & South Korea shed gains and turned red, with focus on the proximity of all-time highs in e-minis, heavy start to the week for crude oil and month-end flows. JPY recovered, further aided by a round of purchases vs. the greenback into the Tokyo fix, even as it is a Gotobi day in Japan. USD struggled to shake off its earlier weakness, after the DXY printed worst levels since mid-2018.

• CHF was the best G10 performer after Swiss voters taking part in the weekend referendums rejected two proposals to (1) make multinational companies liable for human rights/environmental abuses committed abroad & (2) ban funding of weapons producers. The allowed the SNB to avoid shedding ~CHF20bn in equities held as part of its reserves.
• GBP garnered strength with Brexit sentiment swaying towards the positives. Over the weekend, UK Foreign Sec Raab said that a Brexit deal could be struck as soon as this week, even as fishing rights remain a key sticking point.
• Oil-tied CAD & NOK came under pressure as oil traded on a softer footing. The Antipodeans firmed up in early trade, with NZD/USD printing best levels since mid-2018 & AUD/USD narrowing in on a key bull trigger/Sep 1 high. Both crosses shed gains later in the session, with the rapidly escalating Sino-Australian friction weighing on local sentiment. Worth noting that in the absence of notable headline flow the $0.7400 level in AUD/USD may display a degree of magnetism, with A$777mn worth of options with strikes at that figure due to expire today.
• CNH strength evaporated despite the release of above-forecast official PMI readings out of China, with the m'fing gauge indicating that expansion in the sector accelerated to the fastest pace since Sep 2017.
• USD/KRW edged away from cycle lows after South Korea raised the level of social restrictions outside of greater Seoul area, while local industrial output unexpectedly shrank on a M/M basis.
• Today's data highlights include U.S. MNI Chicago PMI, flash German & Italian CPIs, Canadian building permits & current a/c balance. Central bank speaker slate features ECB's Lagarde, Fed's Barkin & BoE's Tenreyro.