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· Asia’s currencies edge higher as China rebound gathers steam

Asia’s trade-exposed currencies inched higher on Monday as China’s rebound from the Covid-19 pandemic stayed on course last quarter, even as caution about the U.S. election outcome kept the U.S. dollar supported against other majors.

China’s gross domestic product grew 4.9% in the September quarter from a year earlier, slower than forecast but faster than the third quarter and aided by strong gains in industrial output and an acceleration in retail sales.

The yuan was last steady in onshore trade at 6.6982 per dollar, after hitting a fresh 18-month peak of 6.6852 in morning trade.

“China’s economy remains on the recovery path, driven by a rebound in exports. Consumer spending is also headed in the right direction, but we cannot say it has completely shaken off the drag caused by the coronavirus.”

Industrial output in September expanded 6.9% from a year earlier, while retail sales grew 3.3%, both well ahead of expectations.

The dollar was broadly stable elsewhere, with investor worries about rising coronavirus cases, the looming U.S. election and fading prospects of any fiscal stimulus beforehand providing support.

The dollar index was following a 0.7% rise last week.

The euro held just above a two-week low at $1.1713.

The yen was steady at 105.40 per dollar while the pound also held its ground as investors clung to hopes for a Brexit breakthrough.

“The dollar can remain elevated this week,” said Commonwealth Bank of Australia analyst Kim Mundy. “A lack of fiscal stimulus and rising coronavirus infections raise concerns about the global economic outlook.”

Faint hopes that Democrats and the White House could agree on a new spending program was tempered by the opposition of Senate Republicans and as investors focused on what the election outcome means for stimulus later.

A victory by Democrat Joe Biden was seen weakening the dollar due to perception of bigger spending.

Fifteen days out from election day, Biden leads Trump by about 10 points in national polls, and has a narrow lead in several battleground states. The pair are due to face off in a final debate on Thursday.

“Markets will be attentive to any potential shift in polls, although traditionally the last debate has less impact in public opinion,” Barclays analysts said in a note.

“The main risk for markets now would be a tightening in polls, which would reduce the likelihood of a large Democratic fiscal stimulus package and could raise the likelihood of a long contested election.”

Investors keeping a wary eye on protests in Thailand. The baht slipped 0.1% as its peers rose on Monday.

· Treasury yields climb as stimulus hopes return to the fore

U.S. government debt prices were lower Monday morning amid renewed optimism that a coronavirus aid package could be agreed in the coming weeks.

At around 2 a.m. ET, the yield on the benchmark 10-year Treasury note rose to 0.7573% while the yield on the 30-year Treasury bond was up at 1.5435%. Yields move inversely to prices.

House Speaker Nancy Pelosi said Sunday that although differences remain between congressional Democrats and White House negotiators, she was optimistic about pushing through legislation on a fiscal stimulus deal before the Nov. 3 election.

· OCBC maintains overweight on emerging market high yield bonds

· Buy emerging market currencies ahead of the US election: Analyst

· Trump and Biden urge supporters to vote early as this week's final debate showdown awaits

President Donald Trump implored supporters in Nevada on Sunday to cast ballots early in a state he narrowly lost in 2016, while Democrat Joe Biden urged North Carolina residents to “go vote today,” as the final presidential debate looms later this week.

· “The many cross-currents we have been fretting over in recent weeks remain omnipresent,” said Sherif Hamid, a strategist at Jefferies, in a note. “The US elections are close at hand, fiscal stimulus remains a key near-term potential catalyst, and developments on the virus front remain critical to the longer-term outlook.”

· Europe must not delay cash to crisis-hit economies, Lagarde tells Le Monde

Europe must distribute its 750 billion euro recovery fund for the pandemic-hit economy promptly and should debate creating a permanent fiscal tool for the bloc, European Central Bank President Christine Lagarde told a French newspaper.

European leaders have been at odds over the details of a multi-year grant and loan scheme called Next Generation EU, raising the risk that cash would not start reaching the hardest hit nations on time.

· Cyberattacks on Japan coronavirus vaccine projects point to China

Some Japanese research institutions developing coronavirus vaccines have been hit by cyberattacks, apparently from China, in what are believed to be the first cases of their kind in the country, a U.S. information security firm said Monday.

· China's economy grew 4.9% in the third quarter of 2020

China's economy is picking up as the country continues to dig its way out of the turmoil caused by the coronavirus pandemic.

The world's second largest economy expanded 4.9% in the July-to-September quarter compared to a year ago, according to government statistics released Monday.

The pace was quicker than the 3.2% increase that China recorded in the second quarter, when it managed to avoid the pandemic-fueled recession that has gripped much of the globe. But the growth was also a bit weaker than expected: Analysts polled by Refinitiv predicted that China's economy would expand 5.2%.

· Japan, Vietnam reach broad agreement on transfer of defence gear

Japan and Vietnam agreed on Monday to strengthen security and economic ties, including an agreement in principle for Japan to export military gear and technology to the Southeast Asian nation, amid concerns about China’s regional assertiveness.

· Hong Kong and Singapore will form a ‘travel bubble’ soon.

Leisure travel between Hong Kong and Singapore could resume in the coming weeks as both cities work to set up a bilateral “travel bubble” that will allow travelers to forgo quarantine.

The two cities both major business and financial centers in Asia have suffered economically as the coronavirus pandemic hit tourism and the aviation sector.

But the arrangement will not bring travel volume between the two cities back to what it was before the pandemic, when several flights ploughed the Hong Kong-Singapore route every day, said Edward Yau, Hong Kong’s secretary for commerce and economic development.

“The concept of the bilateral corridor, what’s commonly called air travel bubble, must be one that ensure safety, public health on the one hand; and also facilitating traveling as much as possible,” Yau told CNBC’s “Squawk Box Asia” on Monday.

· Thai economy starts to feel pain from unrest as Investors unnerved by rise of political risk in Thailand

Political risk is starting to unnerve investors in Thailand. South-east Asia’s second-largest economy is in the grips of a youth protest movement that is growing both in size and audacity.

About $7.8bn flowed out of Thai stocks in the year to the end of August, and another $2.3bn out of bonds. Stocks have dropped more than 20 per cent this year. The Thai baht — seen as a haven currency before Covid-19 because of the country’s generous foreign exchange reserves and cash-cow tourism sector — is down 6 per cent against the dollar.

Eurasia Group recently downgraded its outlook for Thailand to negative because of what it called a “worsening political divide and reform outlook”. The political consultancy assigned a 35 per cent (comically precise, for anyone familiar with the volatility of Thai politics) probability to the risk that the protests would spiral out of control and end in Mr Prayuth’s ousting.