EUR, USD, JPY flows: USD firmer on US PMIs

Stronger than expected US PMIs, particularly on the services, side, underline the divergence between the US and European after this morning’s weak European numbers. The strong US PMI has allowed the USD to regain today’s losses against the JPY while EUR/USD is retesting the 1.04 level. US 2 year yields are up to their highest since late July, and the risk of no Fed action in December is rising. Risks look weighted clearly to the downside for EUR/USD, while at this stage the USD/JPY picture is more neutral.