It is a case of the tail wagging the dog to start European morning trade, as pointed out here. USD/JPY was the early mover, jumping up from 134.30 in the handover from Asia to above 135.00 as equities are looking slightly more subdued and bond yields holding higher on the day. Now, we are seeing that translate to other dollar pairs.
EUR/USD is flat around 1.0540 after a drop from 1.0560 to 1.0520 to start the session. GBP/USD has also slid lower from 1.2320 to 1.2257 and is holding at the lows for the day now, down 0.2% at 1.2262. The dollar has also pared losses against the aussie and kiwi with AUD/USD up just 0.1% to 06800 and NZD/USD down 0.1% to 0.6400 currently.
It's a tentative start to proceedings after last Friday's fleeting relief for the dollar following the more solid US non-farm payrolls report. There isn't much for traders to work with for now amid the Fed blackout period and the waiting for more key data from the US. On the latter, the PPI report on Friday is the next big one to watch so there will be quite a lot of waiting and wondering between now and then.
And of course, all of this is in preparation for next week's two big events i.e. US CPI and FOMC policy meeting.
