No US data but USD shaping up for another test of the highs
As the markets await the key data out of the US this week, there seems to be little interest to follow up on any repricing of the USD in response to US Treasury yields coming lower. The US 10yr Note is now comfortably below 3.00%, though we have seen limited movement in USD/JPY, which has tended to have some form of correlation here. In percentage terms, the pullback into the mid 112.00's was a modest one and NY desks are already pushing the pair higher as we go into the afternoon session in the US.
In Asia, there was also little interest to sell USD/JPY, which held the above levels mentioned, and this has added confidence to buyers who seem to have ignored the stock market rout on Tuesday as well as losses in the Nikkei overnight. Notable losses were seen in the European indices in Europe today also with the exception of Italy, as the coalition government seems to be bending towards EU rules and taking some of the negative sentiment from politics out of domestic assets.
EUR/USD and Cable remain the obvious targets also, with the Brexit backdrop hurting both pairs - more so GBP - though the former also has to contend with the ongoing dispute between the EU and Italy over the latter's budget plans. Nb, Italy are due to submit a revised budget next week.
CAD is the one to target in the wake of the cautious BoC statement released this afternoon, and having pierced the highs seen in Jun this year, a move through 1.3400 puts 1.3500 in the line of fire. With oil prices still struggling for upside traction, it seems the market - for now - is happy to keep pushing, though we also have Canadian payrolls out on Friday which will add to volatility in the spot rate in particular.