Talking Points:

1. Commodity currencies underperform as US Dollar bounces in Asian trade
2. S&P 500 futures hint at corrective risk-off mood to start the trading week
3. Fed-speak may offer clues about tone of upcoming FOMC announcement

The Australian, Canadian and New Zealand Dollars underperformed in overnight trade as the US Dollar staged a broad-based recovery after hitting a three-week low. The three commodity bloc currencies were the best performers against the greenback on Friday, which may help to explain outsized losses as the US currency retraces.

Looking ahead, a quiet economic calendar in European trading hours may keep corrective capital flows in the driver’s seat. Indeed, S&P 500 futures are pointing lower, hinting at a risk-off mood ahead. Follow-through may prove limited however, with moves amounting to little more than digestion ahead of high-profile event risk – notably, the ECB rate decision – on tap in the days ahead.

Fed-speak may likewise prove noteworthy, with comments from Vice Chair Stanley Fischer and Governor Lael Brainard due to cross the wires. Traders will want to hear whether recent improvements in US news-flow have rekindled policymakers’ confidence in stimulus withdrawal, offering a preview of next week’s FOMC meeting. While a rate looks unlikely, the tone of the policy statement and the updated tightening path projection are likely to be pivotal for the greenback and the markets at large.

Asia Session

European Session

Critical Levels