Thumbnail Sketch of Capital Markets on Monday

The US dollar is consolidating last week’s losses in mostly quiet turnover. The euro is the weakest of the majors. It was turned back from the test on the $1.35 area following media reports that the EC lacks confidence in three German lenders (Der Spiegel) and that focus on an unresolved fissure at the heart of Europe (Wall Street Journal).

News that Moody’s cut Anglo-Irish bank’s unguaranteed senior debt to BAA3 from A3 and kept its senior debt on review for a possible cut sent the euro to session lows near $1.3425. The other major currencies are quiet in fairly narrow ranges. Despite the news stream, the tone feels largely corrective in a nature. There was no sign of BOJ intervention and the dollar was confined to a little more than a 12 tick range on either side of JPY84.25.

Asian equities rallied and while European shares followed suit initially, they have stuggled and some are turning day in late European morning trade.

Sovereign bond markets are firmed, though Irish bonds are under pressure. The US $36 bln 2-years today.