Currency markets have shifted for the moment. Dollar buying has slowed, and the euro is now the strongest net bought among the G10 currencies, according to BNY Mellon's FX flow indicators. "Whether this is sustained remains to be seen, but for now it appears that market participants are taking profits on some of their steadily accumulated long-dollar positions especially in the aftermath of the disappointing U.S. labor market data last Friday," notes Samarjit Shankar at BNY. Rising expectations for QE3 in the U.S. are one of the main drivers behind the change, but Treasurys remain well bid, suggesting that "portfolio managers prefer safety and liquidity as they wait and watch," Shankar notes. The euro was at $1.2491, up from $1.2435 late Friday, according to EBS via CQG.
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