U.S. Fiscal Matters/Trump's Health Support Risk, CHF Goes Bid On M&A News

A busy start set the tone of the whole Asia-Pac session, with JPY consolidating as the worst performer in G10 FX space. Improving mood music surrounding U.S. fiscal talks and the potential for discharging U.S. Pres Trump from hospital as soon as today generated risk-on flows early on. USD went offered, but a Gotobi day in Japan further undermined the yen, pushing it to the bottom of the pile.

• M&A matters pulled CHF and its safe haven peers apart, as the franc rallied towards the top of the G10 scoreboard. The news that Japanese NEC agreed to buy Swiss banking software provider Avaloq for Y236bn bolstered CHF at the cost of JPY and CHF/JPY printed best levels in more than two weeks.
• Risk-on flows provided tailwinds for commodity-tied FX. NZD popped higher as NZ PM Ardern confirmed that Auckland will be moved down to alert level 1 this week, which had been agreed in principle. Across the Tasman, several regional holidays dented liquidity.
• GBP has been capped by a lingering deadlock in Brexit negotiations, despite a one-month extension to talks agreed by EU Commission Pres von der Leyen & UK PM Johnson, as well as the UK's rapidly deteriorating coronavirus situation.
• USD/Asia generally traded on a softer footing, with USD/CNH taking advantage of the combination of holiday thinned liquidity and positive risk sentiment to break below the CNH6.74 mark. USD/KRW sold off sharply, as South Korean markets re-opened after a long weekend.
• A number of Services PMI readings from across the world, EZ retail sales and speeches from Fed's Evans, Fed's Bostic & BoJ's Kuroda take focus from here.