Currencies stay mostly calm amid carnage in bond markets

Currency markets remained remarkably stable for most of this week, although the US dollar is rallying sharply today on the back of data showing very strong wage growth in the US, even as a major reassessment of the pace of monetary policy normalisation in developed economies led to a sharp sell-off in short-dated government bonds and interest rate contracts. The ECB and the BoC both delivered hawkish messages at their respective policy meetings, continuing a trend among major DM central banks. But while interest rate expectations rose and both the Loonie and the euro gained in the immediate aftermath of those policy announcements, neither has held on to those gains.