Sterling Feels Brexit Angst

Sterling went offered across the board as the Johnson/von der Leyen dinner failed to bring a breakthrough. Odds of striking a Brexit deal on time have faltered as both sides suggested that they remain far apart on key outstanding issues, while picking Sunday as the new cliff-edge date for reaching accord. Cable recovered from early session lows, but GBP remained comfortably the worst performer in G10 FX space.

• EUR traded mixed ahead of some noteworthy events on the Old Continent. EU leaders will convene for the European Council summit today, but Brexit's not on the agenda. Leaders will focus on coordination on COVID-19, climate change, security and external relations. Meanwhile, the ECB will announce its monetary policy decision, with a presser from Pres Lagarde due in its wake.
• Other than that, the risk switch flicked to on, with commodity- tied FX catching a bid. AUD topped the G10 pile owing to a surge in iron ore futures in Singapore. AUD/NZD rose to a four-week high but failed to make much headway beyond former resistance zone at NZ$1.0628-31 and trimmed gains.
• Safe haven currencies declined, despite lingering concerns over deadlocked U.S. fiscal talks. USD/JPY printed a fresh weekly high, with Gotobi Day flows potentially adding a modicum of pressure to the yen.
• The PBOC set the USD/CNY central parity at 6.5476 this morning, 165 pips weaker for the redback than yesterday's fix and bringing parity off its lowest levels for 29 months. USD/CNH has reclaimed the 6.50 handle but ground lower during the session. USD/CNH last down 13 pips at 6.5271.
• Thailand starts its long weekend today and won't be back until Monday.
• Apart from what was already mentioned, U.S. initial jobless claims & CPI, UK economic activity indicators, Swedish & Norwegian CPIs and comments from BoC's Beaudry take focus today.