Forex Trading Talk 10:00 GMT 23 March 2012

Trade Talk: What's Moving Markets continuous on Forex Forum Key Items: CA- CPI, US- New Homes Sales.  Markets will not have much to trade on today with only Canadian CPI data and U.S. New Homes Sales due over the session. Absent unexpected news, we would expect the correlation trade to be in effect. The EURUSD is trading firm at this hour despite much weaker than expected flash PMI data from the EZ (France and Germany) on Thursday. We would think that the EZ would benefit more from a WEAKER EUR The Chinese flash HSBC PMI on Thursday was weaker than expected as well .Additional PBOC policy ease should be expected soon.  Bond markets remain in the spotlight. The U.S.10-yr is  2.29%, +2bps and the German bund 1.92%. +1bp. Check the Forex Forum over the day for an updated and ongoing discussion of current trading themes in the MARKET CHATTER continuous discussion thread.Forex pairs vs 2-yr note spreads Some traders focus intently on the Japan vs. U.S. 2-yr note spread (only the U.S. 2-yr moves much).  COMMODITIES and Commodity Currencies
 EQUITIES & INTEREST RATESBonds are a counter to risk trades because risk investments must be financed. When the cost of money moves up (higher interest rates), the return and allure of risk trades such as equities falls.