Dollar overextended at the end of last week, pulls back a bit today.
European bonds advance, including Austria, which is dealing with a regional banking crisis.
Syriza's proposals are not as radical as made out to be, but conflict with the Eurogroup is set to continue.
The euro finished last week three standard deviations below its 20-day moving average. Even though the returns in the foreign exchange market are not normally distributed, this is a rare event, and reflected the stretched technical condition of the dollar following the stronger than expected US jobs data. After a slow start in Asia, the euro climbed from a little below $1.0825 to $1.0900, were sellers awaited.
The other major foreign currencies also edged higher against the dollar, with sterling matching the euro's gain. It pushed through the $1.51 level in the European morning, but ran out of steam in front of the first retracement objective the losses seen at the end of last week (~$1.5515).
The dollar consolidated its recent gains against the yen, even though Japanese data were disappointing and the Nikkei fell by nearly 1%. The 10-year JGB yield rose 3 bp to almost 42 bp, which is the highest since February 17. Japan revised lower Q4 GDP to 0.4% from 0.6% quarter-over-year, with the annualized pace slowing to 1.5% from 2.2% of the initial estimate. The deflator ticked up to 2.4% from 2.3%. This is mostly a reflection of the sale tax increase last April. It will drop out of the base effect shortly, and this is encouraging speculation that the BOJ will have to take more action if the inflation target is to be realized.
