FX Update: Risk aversion continued to grip markets
FX Update: Risk aversion continued to grip markets, with fresh concerns about trade protectionism coming from Trump's Twitter rants against Canada over the weekend and with manufacturing PMI surveys in Asia showing the impact of the escalating trade war. China's Caixin PMI hit a 14-month low, while PMI surveys out of Japan and South Korea highlighted slowing export orders. This backdrop has see the Yen hold firm, although magnitude of movement has been fairly contained. USD-JPY drifted back to the south side of 111.0, EUR-JPY carved out an 11-day low and AUD-JPY clocked a new 20-month low. EUR-USD has been holding a narrow range near 1.1600. The Pound came under some pressure, and looks set to come under more once the London market takes up the reins, after the EU's Brexit negotiator Barnier confirmed what most trade-negotiating-savvy people already knew, that the British government's Brexit proposal (specifically for free EU-UK trade deal for goods and agricultural products) is a no go for the EU, with Barnier saying he was "strongly opposed" for added clarity and upending an open ed Prime Minister May wrote in the Sunday Telegraph where she said there will be "no compromises" (although she left herself wriggle room by added "that are not in the national interest." Cable fell to a three-session low of 1.2908.