FX Update: A risk-on vibe saw the yen retain a soft tone
FX Update: A risk-on vibe saw the yen retain a soft tone while the Australian and New Zealand dollars benefited most out of the main currencies, and most developing world currencies posted gains against the dollar and yen. The South African rand rallied most sharply as markets reacted to on relief that Moody's maintained South Africa's investment-grade rating on Friday, although trimming its outlook to "negative". Upbeat mood music continued to flow on the U.S.-China trade front. There are reports that U.S. Commerce Secretary Ross will meet with Chinese Premier Li, while Ross also said over the weekend that the U.S. may not have to impose tariffs on auto imports from the EU following "good conversations". This followed Friday's above-forecast U.S. jobs report and Caixin manufacturing PMI survey out of China, all of which floated the MSCI Asia-Pacific (ex-Japan) equity index to a 14-month high today. This follows fresh record highs being printed by the S&P 500 and NASDAQ on Friday. Yen softness saw USD-JPY lift to within a pip of Friday's high at 108.32 while AUD-JPY breached above its Friday peak in making 74.99. The AUD-JPY cross is up by 3.6% from month-ago levels. Only the pound has outperformed the Aussie over this time period. EUR-USD lifted to within 2 pips of Thursday's two-week high at 1.1175 while EUR-JPY and EUR-GBP and other euro crosses were also buoyant, drawing in on highs seen late last week. Cable settled in a narrow range just below 1.2950 and just above Friday's low at 1.2927. Japanese markets closed today. Regarding U.S.-China trade talks, there is a degree of wariness appearing in market narratives, especially on whether the U.S. will cancel planned December tariffs and remove some of the current tariffs, which is what Beijing has been demanding, while China has been baulking at the level of purchases of U.S. agricultural goods Washington has been demanding.