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CAD: Labour market data the focus, especially after the disappointing numbers seen recently.   The rate seen holding steady at 7.2%, with employment rising 15k (54.5k decline last month). The CAD held up fairly well to the stronger US dollar seen yesterday, but could play catch up with other weaker currencies if labour market data disappoints. See how to trade the Canadian employment data with USD/CAD.

GBP: By and large, UK trade data has disappointed over the past year, both market expectations and also those of the central bank, who have long advocated a move towards an economy less reliant on consumption.   The total trade deficit has deteriorated by 40% on an underlying basis over the past year.   Last month’s data was particularly disappointing at GBP 3.6bln deficit, the market looking for GBP 3.1bln. A bigger than expected deficit would knock sterling, but not drastically so.

ALL: Note that G7 finance ministers and central bankers meet in the UK, but low risk of market moving comments as more an informal discussion with any statement is not likely to break new ground.

Update:  New Phase of Dollar Storm: USD/JPY highest since 2008, AUD/USD Clinging to Parity

Idea of the Day

Yesterday saw the strongest 1 day dollar appreciation since late 2011, going by the DXY dollar index.   The better claims data were supportive, with more stops triggered in the market as USDJPY breached 100 and the Aussie broke to10 month lows.   This follows on from a period during which FX markets were a lot more reluctant to break new ground, USDJPY having twice failed to break above 100 during April and the Aussie finding buyers towards the 1.02 level.   There are no key data releases today and whilst G7 central bank and finance ministers are meeting in the UK, we’re not likely to see an official statement, at least one that is likely to upset markets. This is going to make the price action today crucial, because if these moves are sustained, the market could well gain increased confidence in breaking down these barriers more permanently.

Latest FX News

JPY:  Finally moving above 100 on USDJPY yesterday, the highest level since April 2009.   Overnight portfolio data showing Japanese investors turning net buyers of foreign bonds for the first time since the BoJ’s renewed stimulus measures last month.  This could spur buyers and sustain the move but price action today crucial.

AUD:  Significant moves overnight with AUDUSD the lowest since July 2012 and breaking out of the range that has so dominated over the past 10 months.   The rate cut earlier in the week partly a factor in changing investor perceptions, but stronger US dollar tone after claims data also a factor in the breakout.

NZD:  Also feeling the pain in the generally firmer US dollar environment, at the lowest level since early April.   AUDNZD briefly through 1.20 in Asia trade, but this time more on Aussie weakness than kiwi strength.

USD:   Yesterday saw the strongest one day dollar move (DXY dollar index) since September 2011, helped by decent weekly claims data and key levels being triggered vs. the AUD and also JPY.

More:  Fasten your seat belts – more turbulence ahead