The USD is trading slightly lower overall in the session, extending yesterday’s drop as yields retreat from the early-week highs amid signs that investors are starting to reposition after the run-up in US yields and paring of Fed rate cut bets. Major bond markets are experiencing a mini rally, while stocks are mostly firmer globally. Metals are slightly firmer in the session, but crude prices are down approximately 1%.

Broader international concerns regarding the USD’s rise may be strengthening, while the US is unlikely to alter its course. The US is releasing weekly claims data, the Philly Fed Business Outlook index, Existing Home Sales, and Leading Indicators this morning. Bowman, Williams, and Bostic are speaking today, along with several other central bankers. Fed's "no rush to cut" messaging is likely to persist but is now very familiar to markets.

GBP/USD - Sterling is trading slightly higher in the session, but there is little in terms of fresh news—data or official comments—to note this morning. Gains in the session reflect the softer tone of the USD. UK Retail Sales data will be released on Friday.

USD/CAD - The CAD is trading fractionally higher in the session, reflecting the broader drift in the USD more than anything else. Slightly firmer risk appetite is a positive for CAD at the margin, and spot is trading a bit further from fair value this morning, suggesting some scope for a little more CAD strength in the short run at least. Wide US/Canada short-term spreads will keep the USD well-supported on dips, however.

EUR/USD - The EUR is little changed in the session. ECB Governor Nagel suggested yesterday that there were “still some caveats” to a June rate cut (despite assured comments from Villeroy earlier this week suggesting that a June rate cut is a done deal). Despite these competing factions, June remains a likely jump-off point for easing, but the process of lowering rates may be fairly slow. Governor Vasle commented today that while different economic conditions in the US and Eurozone might warrant different responses, there were limits on how far monetary policy can diverge.