Victoria Covid Count, Ozzie Fiscal Talk, Firmer CNY Conspire To Boost AUD

AUD led gains among G10 currencies as Victoria's daily coronavirus case count eased to just 11, the lowest level in more than three months, while Australian PM Morrison said he expects a dynamic recovery in domestic jobs market. Although Morrison refused to comment on details of a "range of measures" that his government wants to include in the budget (due next month), local press circulated some early indications as to what we may expect. The Sydney Morning Herald pointed to an "astounding" amount of spending that will push deficit "well beyond $200bn", while the AFR noted that states will receive "billions extra in infrastructure funding". Growing expectations of bold fiscal measures lent further support to the Aussie.

• Another AUD-supportive factor was a gradual appreciation in the yuan, aided by a stronger than expected PBoC fix. Spot USD/CNH narrowed in on its multi-month low printed last week, but is yet to test the level. Worth noting that the PBoC left its LPR unchanged, in line with expectations.
• A firmer redback sapped strength from the greenback. USD was the worst performer in the G10 basket and the DXY continued to slide even as e-minis returned into negative territory. Local coronavirus matters (death count approaching 200,000) and a political stand-off surrounding the awaited nomination of a successor of the late Supreme Court Justice Ginsburg provided further headwinds to USD.
• GBP drew support from an FT report noting that UK Cll'r Sunak will extend business support loan scheme in a bid to protect the economy against the impact of the resurging coronavirus. Sterling firmed up even as UK officials warned against a second lockdown, which could be imposed if the nation fails to contain the spread of infections.
• The economic caledar is rather uninspiring, with Japan observing a national holiday. Focus turns to comments from ECB's Lagarde and Holzmann, Fed's Brainard and Riksbank's Ingves.