This event-heavy week starts off with a positive tone as the USD weakens, equities gain, but US Treasury yields tick higher as the market awaits details of the Treasury's “quarterly refunding announcement” set to be released hours ahead of the Fed rate decision on Wednesday.

On a typical week that contains both the FOMC rate decision as well as US Non-Farm Payrolls, most other events would be pushed to the side. However, given the growing concern that the recent spike in Treasury yields is more due to issuance/supply than Fed policy, all eyes will be on the borrowing plan that Treasury Secretary Yellen plans to unveil this Wednesday. In particular, the market will not only be looking for changes in total borrowing amounts but also the tenor breakdown.

The other highlights of the day/week include:

• McDonalds reported better than expected results as recent price increases padded revenue. Apple is set to release its own figures on Thursday.
• The softer-than-expected incursion into Gaza this weekend by the Israeli military added to the positive sentiment buoying markets today as there was much uncertainty with regards to scale heading into this past weekend. While the situation is still a major risk weighing on markets, a lot of negativity is already priced in and the bar for further risk is, unfortunately, set rather low
• The primary event calendar for the week:
  • Tuesday: Canada GDP, China PMIs, Bank of Japan rate decision, Eurozone CPI & GDP, Mexico GDP
  • Wednesday: US Treasury’s quarterly borrowing announcement, US FOMC rate decision, Brazil rate decision
  • Thursday: Bank of England rate decision, Apple earnings
  • Friday: US Non-Farm Payrolls, Canada employment figures

EUR/USD is higher on the day in line with peers. Tomorrow’s Eurozone CPI & GDP will be the primary Euro-specific catalysts after last week’s pause by the ECB.

USD/CAD is lower on the day, retracing a small portion of the almost-3% move higher in the last 30 days, even as oil prices tick lower this morning. Tomorrow’s GDP figures are expected to be mixed with MoM increasing to +0.1% but YoY dropping to 0.9%. Bank of Canada’s Macklem and Rogers are set to speak to lawmakers today ahead of Friday’s employment data.

GBP/USD is close-to-unchanged on the day as the market awaits the Bank of England rate decision on Thursday. They are expected to maintain rates at current levels but the focus will be on how significant their growth concerns going forward are and what that means for forward rates guidance.

USD/MXN is lower on the day ahead of tomorrow’s GDP data calling for a drop to +3.2% in the 3rd quarter from the prior 3.6% reading. The pair remains above its 200-day moving average.

USD/BRL is slightly lower on the day as the market awaits the Brazilian Central Bank’s rate decision on Wednesday. The market is expecting a 50 basis-point cut as recent comments from officials indicated concerns over growth slowdown. Recent BRL strength was reversed somewhat by President Lula’s speech on Friday that cast doubt on the administration's commitment to a zero budget deficit goal for 2024.