US: Confirmation of Trump-Xi Meeting in China

• Notably, the softer risk sentiment initially had little impact on the likes of AUD and NZD Monday, with the greater focus on renewed pessimism for the greenback. However, the pressure on major indices after the US cash open has then provided some notable headwinds for higher beta FX. The 20-day EMA held as great support for AUDUSD on Friday, and the average now intersects at 0.7009, roughly 40 pips from current spot levels.
• As a reminder, recent cycle highs at 0.7147 came within 11 pips of the 2023 peak at 0.7158 and the markets will await January CPI data from Australia on Wednesday.
• The Japanese yen has returned to being the best performer in G10, and this dynamic has weighed specifically on AUDJPY, which has now extended session declines to 0.85%. Today’s high print of 110.18 represents a sixth daily test above the psychological 110 mark before faltering.
• Despite the cross exerting some pressure on the 20-day EMA (intersecting at 108.58) in mid-February, the average has provided solid support over the past four months, and a sustained breach would be a meaningful bearish development. This would signal scope for a deeper correction towards the 50-day, at 106.82.

Monday's Europe rates/bond options flow included:

• DUJ6 106.90/107.00/107.10c fly, bought for 2 in 7.5k
• DUK6 106.90/107.00/107.10c fly, bought for 1.75 in 5k
• ERU6 98.4375/98.50/98.5625c fly, bought for 0.25 in 6k
• SFIU6 97.25/97.00ps 1x2, bought for -5.75 (receive) in 5k
• SFIZ6 97.50/98.00cs, bought for 1.25 in 4k

• EURUSD was initially one of the stronger major pairs on Monday, likely as a function of the Euro’s high weighting in the DXY, registering a solid bounce from last week’s lows to print an overnight high of 1.1835 before stabilising around 1.1800. Short-term technical parameters are located at 1.1742 and 1.1929.
• Notably, the softer risk sentiment initially had little impact on the likes of AUD and NZD, however, the pressure on major indices after the US cash close has then provided some pressure on higher beta FX. The 20-day EMA held as great support for AUDUSD on Friday, and the average now intersects at 0.7009, roughly 50 pips from current spot levels. As a reminder, recent cycle highs at 0.7147 came within 11 pips of the 2023 peak at 0.7158 and the markets will await January CPI data on Wednesday.
• Elsewhere, the Swiss Franc continues to trade resiliently, with EURCHF remaining within 35 pips of the recent 0.9095 cycle lows. A key bellwether of the SNB's view on recent FX price action will be President Schlegel's scheduled remarks tomorrow on the "Economic situation and monetary policy of the SNB". Most recent analyst views continue to take a favourable view of the Swiss Franc going forward.
• US ADP Weekly Employment Change, Consumer Confidence and Richmond Manufacturing Index data are all due Tuesday, while a plethora of Fed speakers are also scheduled.