NEW YORK (TheStreet) -- The dollar is mixed vs. the majors Monday but is trading in very narrow ranges. The U.S. Labor Day holiday is expected to keep trading quiet.
The dollar/yen currency pair (USD/JPY), which had bounced sharply on Friday's numbers, has given up most of those gains and is trading just above the 84 level, while the euro/dollar (EUR/USD) climbed briefly above 1.29 and has held on to recent gains.
The Swiss franc (CHF) and yen (JPY) are largely stronger today, so risk-on trading has not come back full force just yet. Looking ahead, there are several central bank meetings this week, including Australia, Japan, Canada, U.K., Korea, Peru and South Africa.
The pound (GBP) is faring poorly due to expectations that further quantitative easing may be discussed by the Bank of England. The pound/dollar pair has given up much of its recent gains, and so EUR/GBP climbed to near .8400, its highest level since late July.
Emerging-market currencies are mixed so far today. The biggest winners vs. the dollar so far today are the Philippine peso (PHP), won (KRW), New Zealand dollar (NZD), yuan (CNY), and Canadian dollar (CAD), while the biggest losers so far today are the pound, hryvnia (UAH), rand (ZAR), koruna (CZK) and leu (RON).
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Asian stocks advanced in follow-through trading as sentiment was positive following the U.S. nonfarm payrolls report Friday. Japan's Nikkei 225 led gains in the region, rising 2.1%, while China, India and Indonesia also outperformed. Thailand, the Philippines and Malaysia underperformed, with the KLCI actually down on the day. European markets are trading higher so far today, while U.S. markets are closed.
Japanese bonds fell sharply for the fourth day amid stock gains. The 10-year JGB yields rose 5 basis points to 1.185% overnight, and is up more than 20 basis points in the past four sessions. The Ministry of Finance is due to sell 600 billion yen ($7 billion) of 30-year debt this week. Core European bond markets opened higher, with Germany's 10-year bund yield down 4 basis points to 2.32%. However, peripheral bond markets are lower today, so peripheral spreads have widened out. Greece is the worst performer, with 10-year spreads up 26 basis points on the day.
Currency Markets
The Bank of Japan began its two-day board meeting today, which comes after the emergency meeting last week which saw an extension to its corporate credit program. Governor Masaaki Shirakawa and his board are seen as very unlikely to embark on any new measures as most expect them to wait and observe markets for longer before moving again.
A weekend story in the Nikkei also suggested the bank's ability to purchase government debt fell below 20 trillion yen at the end of last month, leaving it with reduced firepower in terms of further easing of monetary policy.
The bank reportedly has a self-imposed rule to limit holdings of long-term bonds to the outstanding balance of banknotes in circulation, and the Nikkei noted that the difference between the Bank of Japan's bond holdings and outstanding banknotes fell to 19.77 trillion yen at the end of August vs. 34 trillion yen at the beginning of last year.
