The dollar dropped sharply overnight against the yen and Europeans, together with stocks and yields. The Dow lost -176 pts, or -1.07% to close at 16197.35, at the lowest level in a month. Nonetheless, we might see some support before the week closes as it approaches the 55 day EMA current at 16109.58. 30 year yield lost -0.078% to close at 3.681% while 10 year yield also lost -0.087% to close at 2.773%. Both , hitting a 2+ month low. Dollar index reversed ahead of 81.48 near term resistance and is now back at around 80.50 level.
In the currency markets, the USD/JPY's strong break of 103.85 support now put focus back to 102.85 support. And the development suggests that correction pattern from 105.41 is indeed still in progress for another low. The USD/CHF's break of 0.8986 support also indicates near term weakness and now favors deeper decline in near term back towards 0.8799 low. The break in the USD/CHF also serves as an early alert that the EUR/USD could take out near term resistance of 1.3699 today or early next week. And in that case, we might see the EUR/USD having a test on 1.3892 resistance next.
On the data front, main focus today would be on Canadian inflation data. CPI is expected to accelerate back from 0.9% yoy to 1.4% yoy in December. Meanwhile, Core CPI is also expected to climb from 1.1% yoy to 1.3% yoy. USD/CAD's rally took a breath after surging to as high as 1.1173 this week. But miss in CPI figure could fuel another rally to 1.2 handle and above. UK BBA mortgage approvals will also be featured in European session.