The USD continued its grind higher in a.......>

FOREX: The USD continued its grind higher in a holiday thinned session.

- The USD outperformance came despite media reports noting that the US is ready

to slap tariffs on $50bln worth of Chinese goods, while this isn't particularly

new it was enough to weigh on risk appetite, particularly when coupled with WSJ

reports suggesting that China is ready to retaliate to the tariffs. In terms of

the majors, the commodity linked currencies bore the brunt of the pressure

stemming from these headlines.

- The JPY had been outperforming, but the JPY gave up most of its gains (with

USDJPY turning marginally positive) as the BoJ left its monetary policy settings

unchanged as expected, but downgraded its view on inflation, some had suggested

that this could happen. There was no change elsewhere, with an 8-1 vote, and

Kataoka the lone dovish dissenter as ever.

- Focus Friday turns to Eurozone final CPI data, US Michigan sentiment data and

speeches from ECB's Nowotny, Coeure and Smets as well as comments from Fed's

Kaplan.