Gold and oil rose sharply at the end last week on fears that the Israel-Hamas conflict would escalate this weekend.
The US dollar has been largely weaker. Stronger-than-expected Australian retail sales and the risk of a hike next week and this appears to be helping the Australian dollar lead the advancing G10 currencies. The dollar also remains below JPY150.
US index futures have been trading higher. Last week, the S&P 500 fell by a bit more than 2.5%. Treasury will announce Q4 funding plans a few hours before Wednesday's FOMC meeting.
Australia's retail sales rose by 0.9% in September, well above the 0.3% median projection of Bloomberg 's survey. July and August have been revised upwards. The Australian dollar is the strongest currency in the G10, with a rise of almost 0.5% to reach the pre-weekend peak, which is around $0.6370.
Tomorrow, Japan will release its September employment report as well as retail sales and industrial output data. Strong data is expected.
After the stronger-than-expected Tokyo CPI fueled speculation about a change in BOJ policies this week, position-squaring seemed to have pushed the dollar down ahead of the weekend. Today, the dollar's losses reached JPY149.30.
The balance of risk in the Eurozone is shifting, as will be shown by the highlights this week: the Q3 GDP and the October preliminary CPI. Tomorrow, they will be released.
The eurozone news is not inspiring, and the currency languishes at its bottom as it consolidates. It has fallen for 11 weeks in a row.
Sterling's pattern is similar. The peak was reached on Wednesday last week, but it was a bit below the high of the month. It has since consolidated within a cent range under $1.2175.
Before the weekend, the University of Michigan Consumer Confidence Survey reported that the one-year inflation expectation had risen from 3.2% to 3.8% in September and then to a final reading of 4.2%.
Before the weekend, the Canadian dollar reached new lows in the past year. The Canadian dollar was the second weakest currency in the G10, behind the Swiss Franc. Oil and risk are two exogenous factors that seem to be in opposition.