Sterling was the only gainer last week as.....>

FOREX: Sterling was the only gainer last week as the pair bucked the trend of

dollar strength driven by rising nominal and real US yields, even as USJPY gave

back gains seen earlier in the week, pressured by AUD and NZD crosses.

- Focus should return to USDCNH after a long period of stability has seen

volatility drop sharply. Traders will look for any signs that a fresh round of

USDCNH strength is coming following the PBOC's targeted easing measures. While

the PBOC has played down that the RRR cut represents easing, divergence monetary

policy stances between the Fed and the PBOC put the yuan at risk, particularly

as EURCNH remains below the key 8.0 level.

- Italian bond market developments will also be key to the euro, with last

week's yield spike impacting their euro via US-German real yield spreads, which

now sit at fresh cycle highs.