FX Update. The yen softened amid a cautious risk-on theme
FX Update. The yen softened amid a cautious risk-on theme in markets, which lifted stock markets in Asia moderately. While concerns remain about progress in U.S.-China trade talks ahead of a December-15 deadline for a tariff hike, with U.S. legislation on Hong Kong human rights souring relations, Chinese manufacturing PMI surveys came in better than expected. The Caixin PMI, released today, unexpectedly lifted a two-year high of 51.8 from October’s 51.7, while the official PMI, released Saturday, rose to 50.2 from 49.3. The yen posted new trend lows against the dollar and some of the other main currencies. USD-JPY clocked a seven-month high at 109.72, setting up this week to be the fourth week of the last six where a higher high has been seen. EUR-JPY saw a 25-day high, and AUD-JPY an 18-day peak. The dollar, while gaining on the underperforming yen, lost ground to the Australian and New Zealand dollars, and traded within respective Friday ranges in the case against the euro, sterling and Canadian dollar, among other currencies. The pound, although leaving Friday's ranges unchallenged, saw about a 30-pip drop versus the dollar, and about a 20-pip dip against the euro, at the opening of trade following a weekend opinion poll showing the Labour party to have narrowed the gap on the Conservatives. Politicos poll tracker is showing the Conservative party with 43% support, unchanged from Friday, and Labour with 32% support, up a point from Friday. Incoming polls will be scrutinized for signs of a late surge in support, though with the election looming next Thursday, it is still looking likely that PM Johnson's Tories will be returned to parliament with a working majority.