ASIA MORNING: Election Outlook Drives GBP Outperformance

*Sterling gearing up for another attempt at 1.3?
*RBA minutes to draw mild volatility
*Nothing to glean from Powell and Trump's meet
*90-day license granted for Huawei but USDCNH points up

Conservatives lead UK polls

As mentioned in our THREE MONDAY TALKING POINTS: Fewer Stumbling Blocks we expect Sterling correlation to UK election outcomes to stick around over the next few weeks, acting as the main lever of GBP volatility. GBPUSD, currently at 1.295, looks to make another attempt at 1.3 having gained 0.4% overnight. The prior two attempts made in October were swiftly rejected after PM Johnson failed to push his Brexit deal through parliamentary channels.

1.3 the test for Sterling

Markets are pricing in a base case that Conservatives maintain majority come Dec 12 though it's probably too early to tell if markets can meaningfully break key resistance at 1.3 just yet with party campaigns still to run. We feel short EURGBP bias makes sense given less catalysts for EUR upside in the near-term. 

GBPUSD (daily bars). Source: ThinkMarkets

Watch out for RBA surprises 

Asia Tuesday brings little data risk on the calendar, but we do catch RBA Nov. Minutes at 11.30am AEDT. We don't expect great volatility in AUDUSD off the back of the release given the RBA have tended to be very consistent when delivering their minutes. However, it goes without saying, we'll still scour through the paragraphs looking for any hints of down-the-track QE or explicit changes in tone/language. Markets are pricing in a 76% likelihood that the RBA hold at their next Dec. 3 meeting.

Powell and Trump meeting subdued

Though it could have made for some interesting headlines given their widely known differences, the meeting between Fed Gov. Powell and US President Trump was far from interesting and quite cordial in fact. The discussion covered a broad range of topics including the economy, growth employment and inflation. Powell's official press release noted that monetary policy expectations were not discussed. Markets will closely monitor any further headlines in this space.

Huawei gets 90-day extension

Huawei have been extended a 90-day reprieve that allows American companies to continue doing business with the Chinese telecoms company. The outcome delivered was in line with market expectations. USDCNH trades a touch below 7.025 having found support at 7, and appears to be open to moving higher following yesterday's PBOC surprise 7-day reverse repo rate cut and asymmetric downside risks to US-China trade