Risk On In Asia As US House Passes Stimulus Bill, Goes To Senate

Risk appetite was boosted after U.S. President Trump signed off on the coronavirus relief bill. The news that U.S. Pres-elect Biden is planning to invoke the Defense Production Act to boost the production of Covid-19 jabs lent further support to risk appetite. The U.S dollar initially gained into year-end despite the risk on sentiment, but the move has reversed in Asia and a weaker DXY is driving most price action in the region.

• Markets are now assessing the chances of the coronavirus relief package making it through the Senate. Current indications are that the Republican controlled Senate will not support the increased amount, casting further uncertainty on the process.
• GBP/USD last up 42 pips at 1.3493. However, the move higher barely makes up any of the drop from Monday after the pair fell from highs of 1.3581. GBP has taken a hit and snapped a three-day winning streak in the process, concerns over the impact of the last minute Brexit trade deal are weighing
• Commodity currencies have made up some of the drop from Monday, AUD/USD and NZD/USD both around 18 pips higher, but still some way off highs seen in Monday's session. The move lower on Monday tracked a decline in oil prices as markets weigh reduced future demand on renewed Covid concerns. The commodity complex has gained on Tuesday which has helped support AUD & NZD.
• USD/JPY is seeing rangebound trade, last down 15 pips at 103.66.
• The PBOC set dollar/yuan midpoint at 6.5451. A higher fix initially saw yuan weaken, but USD/CNH has dropped as the U.S. dollar gives back its move higher from Monday. Equity markets in China were tempered by some geopolitical tensions after China said it opposed the U.S.'s Taiwan assurance act which was signed on Sunday, but the yuan shrugged this off.