The London fixing of Libor, oil and gold prices, along with whispers of eurozone banking stress test criteria, created a long-dollar spike against the European pairs in Friday trade, and allowed euro, cable and swissy to test the resolve of the speculative interest that is looking for a dollar index decline.

Aussie and yen hardly moved in response to the moves, at the same time that USD/CAD declined on very impressive employment data. This sets up a great week of potential to come, and sets the tone for movement in reaction to equity earning season.

Equity trade is moving on very low institutional and speculative interest and continues to hold support. Whether that will follow through into big moves higher will come down to earnings reports and investor sentiment that right now is at an all-time low regarding trust in the exchange market and concerns over algorithm trading.

The amount of redemptions from mutual and hedge funds has been dramatic, and may create a short-squeeze on global equity trade if the low-volume, high-frequency intra-day volatility persists.

The decoupling of the inverse risk/dollar correlation that was highlighted in June client notes by the trade team is continuing, and traders will be looking for momentum and price action around red-flag calendar releases and at the opening and closing of regional markets.

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