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U.S. government debt prices were higher on Monday as investors monitored news of a potential vaccine against Covid-19.

At around 2:30 a.m. ET, the yield on the benchmark 10-year Treasury note fell by 0.18% to trade at 0.6658%. The yield on the 30-year Treasury bond also dropped by 8 basis points to 1.4142%. Yields move inversely to prices.

There is no economic data scheduled for Monday.

· No signs of a Fed consensus on bond buying plan: Standard Chartered

· Pound dogged by Brexit worries, yen looks to Abe successor vote

The British pound flirted with a 1 1/2-month low against the dollar on Monday on fears about no-deal Brexit while investors waited for Japan’s ruling party to choose a successor to Prime Minister Shinzo Abe.

The British pound ticked up slightly in Asia to $1.2819, after having hit $1.2767 on Friday, its lowest since July 24. It has lost more than 4% so far this month, the worst among G10 currencies.

Against the euro, it slid to a 5 1/2-month low of 92.90 pence per euro and last stood at 92.39.

The pound was under pressure from fears that Britain will end its post-Brexit transition period with no trade agreements.

London explicitly acknowledged last week that it could break international law by ignoring some parts of its European Union divorce treaty, prompting a rapid rebuke from the EU’s chief executive.

The dollar stood at 106.13 yen, stuck in its familiar territory in the past couple of weeks.

The euro held firm after three straight days of gains at $1.18455.

Still, it faces an uphill battle in tackling the $1.20 barrier, with investors wary euro zone policy makers may not want to see the currency strengthen much beyond that level.

Some euro zone countries, such as France and Spain, are reporting rises in coronavirus infections, in contrast to falls in the United States, clouding the outlook for economic recovery.

The dollar’s index against a basket of currencies stood little changed at 93.317, with focus on the Federal Reserve’s policy announcement on Wednesday.

Expectations of further monetary easing by the Fed have been a drag on the dollar. The dollar index has lost more than 4% so far this quarter.

But some analysts say markets may have gone too far in expecting further Fed stimulus.

· Johnson's plan to break Brexit divorce treaty faces vote in UK parliament

British Prime Minister Boris Johnson’s plan to break international law by breaching parts of the Brexit divorce treaty with the European Union faces a vote in parliament on Monday amid growing opposition from within his own party.

The House of Commons will on Monday debate the Internal Market Bill, which the EU has demanded Johnson scrap by the end of September. After the debate, lawmakers will decide if it should go to the next stage. A vote could be late.

Johnson’s decision to explicitly break international law has plunged Brexit back into crisis less than four months before Britain is finally due to leave the EU’s orbit when a post-Brexit transition period ends in December.

The EU has ramped up no-deal Brexit preparations while Britain has dismissed an ultimatum from Brussels to scrap the main parts of the bill by the end of September.

· France's Le Maire says economy is on the right track

French Finance Minister Bruno Le Maire said on Monday the French economy was on the right track, reiterating economic growth could do better than the 11 percent contraction currently forecast for 2020.

Le Maire made the comments in an interview with France 2 television.

· German economic recovery weakens but set to continue in second-half: ministry

Germany’s economic recovery from the coronavirus crisis has weakened but the revival is likely to continue in the rest of 2020, the Economy Ministry said on Monday.

Europe’s largest economy, which has been hit hard by the pandemic, will not reach its pre-crisis level until the beginning of 2022, the ministry said in its monthly report.

It pointed to weaker industrial production and a sluggish recovery in foreign trade.

· ByteDance drops TikTok's U.S. sale, to partner with Oracle: sources

ByteDance abandoned the sale of TikTok in the United States on Sunday in pursuit of a partnership with Oracle Corp ORCL.N that it hopes will spare it a U.S. ban while appeasing China's government, people familiar with the matter told Reuters.

The Beijing-based company had been in talks to divest TikTok's U.S. business to either Oracle or a consortium led by Microsoft Corp MSFT.O after U.S. President Donald Trump ordered the sale last month and threatened to shut down the popular short-video app in the United States.

While TikTok is best known for its anodyne videos of people dancing that go viral among teenagers, U.S. officials have expressed concerns that information on users could be passed on to China’s communist government. TikTok, which has as many as 100 million U.S. users, has said it would not comply with any request to share such data with the Chinese authorities.

· China's new home prices growth steady, supports economic recovery

New home prices in China rose at a slightly faster monthly pace in August, as consumer demand showed signs of picking up in a boost to an economy recovering from the coronavirus crisis.

Average new home prices in 70 major cities climbed 0.6% in August from a month earlier, a touch better than a 0.5% increase in July, according to Reuters calculations based on data released by the National Bureau of Statistics on Monday.

· Hong Kong ‘won’t interfere’ after China arrests 12 fleeing for Taiwan at sea

Hong Kong's government stood fast in its refusal to interfere with the arrest of 12 residents seeking to flee to Taiwan by sea, despite pleas from families for assistance, saying the crime falls under mainland Chinese jurisdiction.

In a statement late on Sunday, Hong Kong authorities said they had received requests for help from the families of the residents who were detained last month by mainland law enforcement for illegal entry into mainland China after trying to flee to Taiwan.

• Japan's Suga wins party leadership race, headed for premiership

Japanese Chief Cabinet Secretary Yoshihide Suga, a loyal aide of outgoing Prime Minister Shinzo Abe, won a landslide victory in a ruling party leadership election on Monday, paving the way for him to replace Abe this week in the nation’s top job.

Suga, 71, who has said he would pursue Abe’s key economic and foreign policies, won 377 votes out of 534 votes cast, and 535 possible votes, in the Liberal Democratic Party (LDP) election by the party’s members of parliament and representatives of its 47 local chapters.

Rival Shigeru Ishiba, a former defence minister, won 68 votes and ex-foreign minister Fumio Kishida got 89.

Suga is virtually certain to be elected prime minister in a parliamentary vote on Wednesday because of the LDP’s majority in the lower house. He will serve out Abe’s term as party leader through September 2021.

· Japan's Suga says wants to continue Abe policies after winning LDP race

Japan’s next prime minister, Yoshihide Suga, said he wanted to continue with the policies of predecessor Shinzo Abe, and push structural reforms while removing barriers between the bureaucracy.

Suga made the comments in a speech soon after he was overwhelmingly voted in as the next leader of the ruling Liberal Democratic Party, which virtually assures him of becoming the next prime minister, given the party’s majority in parliament.

· Japan's next PM set to be Yoshihide Suga

Suga is expected to keep up 'Abenomics' (weak JPY). Watch out for Suga calling a snap election which could cause the Yen to rise on the risk of 'Abenomics' coming to an end. The BoJ should play second fiddle to politics at their upcoming meeting and no change is expected for now.

· Asia’s best-performing currency is partly supported by a weak economy

The Philippines’ falling imports as a result of a weak domestic economy have ended up benefiting its currency — which is the best performer in Asia so far this year.

The Philippine peso has strengthened around 4% against the U.S. dollar this year, outperforming its regional peers. It is also one of the few Asian currencies that has recorded gains versus the greenback, alongside the Chinese yuan and Taiwanese dollar.

A collapse in demand for imports came after the Southeast Asian country went through one of the world’s longest and strictest lockdowns to contain the coronavirus. The fall in imports was steeper than exports, which proved to be a boon to the currency as it flipped the Philippines’ currency account into surplus, said economists.

Current account measures a country’s total transactions with the rest of the world, including imports and exports of goods, cross-border investments, as well as transfers such as foreign aid.

· Australia sees lowest one-day rise in coronavirus cases in almost 3 months

Australia reported its lowest one-day rise in novel coronavirus infections in nearly three months on Monday as authorities began to ease restrictions aimed at slowing its spread.

· Oil moves higher as storm threatens U.S. Gulf Coast

Oil prices rose on Monday as a tropical storm in the Gulf of Mexico prompted drillers to evacuate rigs and shut in production, although gains were muted by concerns about excess global supplies and falling fuel demand.

U.S. West Texas Intermediate (WTI) crude futures were trading up 14 cents, or 0.4%, at $37.47 a barrel by around 0629 GMT. Brent crude was 6 cents, or 0.2%, higher at $39.89 a barrel.

Reference: CNBC, Reuters, ForexLive