Risk On

Another quiet start to the session in Asia on Tuesday, volumes subdued as US participants return slowly to market following the Martin Luther King Jr. day on Monday.

• Positive risk sentiment in Asia has been the story so far, equity indices in the region are in the green and bond yields have ticked higher.
• AUD & NZD been boosted alongside risk assets, both gaining around 20 pips against the greenback, but both are still within yesterday's ranges. Regional coronavirus news is also helping support the bid, NSW reported zero new cases again. Some reports that strength stems from a Capital Economics forecast that the RBA will end QE in April and RBNZ will be first to raise rates next year.
• USD/JPY was biased lower on Monday as the yen caught a bid in thin holiday trade, currently holding these levels, though other JPY crosses seeing some upside movement as safe haven demand falters. EUR/JPY up 14 pips at 125.37.
• The PBOC fixed USD/CNY at 6.4883, in line with sell side estimates and around 38 pips higher than yesterday. The bank injected CNY 75bn, well above the CNY 5bn injections seen over the past week.
• EUR & GBP both modestly higher as risk assets favoured and USD recedes.
• Looking ahead markets will focus on an address from President-elect Biden's selection for Tsy Secretary, Janet Yellen, as she appears in front of the Senate Finance Committee. Other data highlights include German CPI data and ZEW Survey.