Themes

· General mood is “risk off”

· Bank of Canada raises interest rates 50bps as expected

· U.S. ISM Manufacturing PMI stronger at 56.1 from 54.4 talk

What’s Moving

Dollar strength was the story of the overnight session, with the Big Dollar gaining against all of the majors in a strong session of Dollar buying interest. The interest rate hike from the Bank of Canada supported the CAD and the AUD initially, but the Dollar buying was just too strong over the day.

Sterling had a bad day overnight, with position squaring ahead of the U.K. four-day weekend driving the GBP to near two-week lows. This pressure also added further downside to the Euro.

Thoughts

Expect consolidation of the overnight Dollar strength in Asia today, with China out on holidays today and with the U.K. closed until next Monday. Australian numbers will be keenly eyed for short-term directional bias.

Data in Asia today includes:

· Japanese Monetary Base (E: 2.3%)

· Australian Retail Sales (E: +0.9%)

· Australian Trade Balance (E: 9.02bln)