The kiwi and aussie are benefiting from a stronger yuan today
The PBOC moved to fix the yuan significantly stronger today and that is providing some jet fuel for the aussie and kiwi as both currencies tracked higher as we move towards European trading. Part of that may be attributed to a weak dollar but you can't help to wonder if this is part of a political gesture ahead of trade talks in Washington later this week.
Nonetheless, that is helping to keep the two commodity/risk currencies afloat as risk sentiment remains rather tepid. Asian stocks were initially higher but then erased those gains in the past two hours. That is helping to keep the yen underpinned after a decent start to the new week which saw USD/JPY fall from 109.50 levels to near 109.30 currently.
Meanwhile, the pound is on the back foot now after having fed off some good news earlier that Theresa May is reportedly privately ruling out a no-deal Brexit, according to The Sun here. I would expect the headlines to offer the pound some support in the session ahead but I wouldn't be surprised if government sources come out to deny the report as well.
Although the cat is out of the bag, they can't afford to let it be the official tagline as that would weaken their negotiating position with the European Union.
It's going to be an interesting week for risk with tech earnings to come in Wall St (Caterpillar kicks things off today) and US-China trade talks set to begin on Wednesday. The Brexit debate reopens tomorrow so expect more headlines to follow in due time.
