CAD lags behind on the day

It’s a bit of a messy start to the week given the G7 summit over the weekend, but Trump’s tweets after dominated headlines and were the cause of early moves in the currencies space.

Commodity currencies and the dollar opened with a gap down with expectations of a poorer risk sentiment, but the focus thereafter has been more singled out with the Canadian dollar being the weakest major currency as it gets caught in the crossfire between Trump and Trudeau’s trade spat.

The yen also lags behind on the day as US yields are trading back higher, 10-year yields are now 1 bps up on the day to 2.955% and it seems like the equities market is also having a good day ahead of European trading later. Most major bourses in Asia are posting gains, with the bad egg being mainland Chinese stocks once again.

Watch out for Treasuries as there are key auctions coming up this week, starting with a total of $68 billion of 3-, 10-, and 30-year securities today and tomorrow.

Meanwhile, the euro leads on the day with EUR/USD trading close to the 1.1800 handle again ahead of the ECB meeting to come this Thursday. That will be the key focus for euro traders on the week and so far expectations are leaning more towards a possible tilt towards a hawkish decision by the ECB to announce tapering of its QE program – along with upgraded inflation projections.

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