Risk Buoyant As White House Transition Gets Underway, NZD Aided By Proposal To Amend RBNZ Remit

U.S. politics took centre stage, after the General Services Administration recognised Joe Biden as the "apparent winner" of the presidential election, triggering a formal transition process. Outgoing Pres Trump suggested that he will continue his legal fight, but said he instructed his team to cooperate, with subsequent reports pointing to various gov't agencies preparing for the transfer of power. The news bolstered risk appetite, building on yesterday's positive Covid-19 vaccine news & U.S. Pres-elect Biden's decision to nominate ex-Fed Chair Yellen to become the next U.S. Tsy Sec. Risk-on flows swept across G10 FX space, putting a bid into high-beta currencies.

• NZD comfortably outperformed its G10 peers, as existing risk-on pressure was amplified by the unwinding of RBNZ easing bets in reaction to NZ FinMin Robertson's proposal to add house prices to the RBNZ's remit. In a letter to RBNZ Gov Orr, Robertson asked the central bank to urgently consider the idea amid "the recent escalation in housing prices, and forecasts for this to continue". RBNZ Gov Orr replied that the MPC already takes asset prices into consideration, but monetary and financial policy alone cannot fix structural problems with the housing market, adding that he will respond with a broader feedback in due course.
• Greenback weakness helped NZD/USD punch through key resistance from Dec 4, 2018 high of $0.6970 and briefly approach the $0.7000 mark. AUD/NZD tested the water under key near-term support from Apr 21 low of NZ$1.0484.
• AUD looked through a speech from RBA Dep Gov Debelle, who said that the central bank's expected policy easing delivered this month helped lower the exchange rate.
• BoJ Gov Kuroda offered little in the way of fresh insights in his latest parliamentary testimony. JPY sat at the bottom of the G10 pile as Japan returned from holidays.
• German Ifo Survey & final GDP, U.S. Conf. Board Consumer Confidence take focus today, with speeches due from Fed's Bullard, Williams & Clarida, ECB's Lagarde, Lane & de Cos, BoE's Haskel & BoC's Wilkins.