The US took a holiday and the dollar was still the best performer.

Mild risk aversion was the theme of the day as China has yet to deliver the stimulus package that was rumored to come at the weekend. Rising yields and the fear of large rebalancing flows at the end of the quarter were also mentioned. The movement came largely in Asia and soon in Europe, but not completely.

Cable sold off to 1.2770 from 1.2790 during the European day. There was also some bidding in USD/CAD as the Canadian trade remained open. Canada’s PPI data was weak, suggesting the Bank of Canada may not need to hike as much. In addition, oil prices fell in China and news of lighter Russian cargoes made its way to China. USD/CAD ends the day up 18 pips at 1.3213.

USD/JPY held a strong bid in a sign of what is likely to come for the reopening of the government bond market. Selling was met with strong bids, although the 142.00 barrier is holding.

The euro largely settled around 1.0920 after an early decline in Europe. At the end of the day, it reached a range from 1.0908 to 1.0930 with something like a double top covering the upside. The more I hear from various ECB policymakers, the more it sounds like some heated negotiations are on the way.

Counters were slow all day due to China stress, but movements were minimal in North American trade.