"The global economy in 2021 should move gradually toward normalisation... With excessive liquidity, the market's upward momentum should strengthen further," the brokerage said.
Foreign exchange forward curves moved upward as a result of higher demand for the yuan. Spot-next contract for dollar/yuan jumped to 70 points on Tuesday morning, the highest since late September.
The number of virus cases continues to soar in Japan and Prime Minister Yoshihide Suga urged people to avoid gatherings, saying "the virus has no holidays".
The yuan crept up after China's central bank lifted its official guidance level to the highest in 30 months , to as high as 6.5280 against the dollar in the onshore market, but was last unchanged at 6.5408.
Official data showed robust growth in profits at China's industrial firms in November, their seventh straight month of gains, supported by strong industrial production and sales, as manufacturers continue their recovery from the COVID-19 downturn.
Mitsuo Imaizumi, chief FX strategist at Daiwa Securities in Tokyo, expects the pound and euro to decline against the dollar, reaching $1.30 and $1.15 respectively by the end of the summer.
In Tokyo, Mitsubishi Heavy Industries rallied 2.60 percent to 2,977.5 yen following a report that the firm plans to build a massive zero-carbon steel plant running on hydrogen in Austria.
SoftBank Group was down 1.13 percent at 8,393 yen following reports that it applied for an initial public offering of a special purpose acquisition company (SPAC) called SVF Investment to raise up to $525 million.
China will maintain policy support for its economic recovery, avoiding a sudden shift in policy, to help keep economic growth within a reasonable range in 2021, the Xinhua news agency said on Friday.
South Africa said on Friday a virus strain similar to the one reported in the United Kingdom was driving a second wave in the country, prompting some countries to include South Africa in their travel bans.
Oil prices also sank as the new containment measures hammered expectations for travel over the Christmas period, with the discovery of a mutated and more infectious strain of the coronavirus in Britain also leading several governments to ban flights from the country.
The Bank of Japan ends its two-day policy meeting on Friday and is expected to leave rates steady but announce an extension of a package of steps aimed at easing corporate funding strains.