The U.S. dollar was mostly firmer vs. the majors. EUR/USD made a marginal new low for the cycle at 1.2111, helped by rumors of a France downgrade, but then spiked higher during North American trading before closing lower on the day. With a negative news stream likely to continue, we believe the euro bear trend remains intact.

Yen was firmer, too, but kept up with the buck and so dollar/yen stayed around 91. EM FX were mostly softer. Only gainers on the day vs. USD were GBP, ILS and JPY, while biggest losers vs. USD were INR, AUD, MYR, PLN and CZK.

US data was stronger than expected, with ISM PMI at 59.7 and construction spending surging 2.7% month over month.

Czech's political outlook is cloudy as center-right parties hit a stumbling block in forming a coalition. RBA left rates steady, BOC hiked rates 25 bp. Head of EU Fin Min group Juncker expressed concern about the pace of euro's drop, not about the current level.

We note that the pace of weakness has slowed since mid-May. U.S. equity markets were lower, as the Dow Jones Industrial Average, S&P 500 and Nasdaq ended down 1.1%, 1.7% and 1.5%, respectively. European markets were down, too, with Euro Stoxx 50 falling 0.1%. Asian equities are likely to open down today as Asian ADRs were lower during North American trading Tuesday. Nikkei futures point to a down open for Japan.

U.S. bond market was higher, as 2- and 10-year yields were down 1 bp and 3 bp, respectively. European bond markets were mostly lower, as 10-year yields in UK, France and Germany were down 1 bp, up 4 bp and up 2 bp, respectively. Greek 10-year yields rose 14 bp, Portugal rose 10 bp, Ireland rose 11 bp, Italy rose 3 bp and Spain rose 6 bp.

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