The JPY rebound has extended further today and is proving to be a wrecking ball for leveraged trades across a range of markets. European stocks are sharply lower following yesterday's heavy US market losses. US equity futures are mixed to lower this morning. Volatility is increasing as markets grow nervous—the VIX is trading near 19, its highest since April, which is amplifying the shift of investor funds away from riskier assets (stocks) and into havens (JPY, CHF, USD—to some extent this morning—and bonds). This morning's US data reports are a minor distraction amid the carry unwind, but US Q2 GDP, Durable Goods orders, and weekly jobless claims could impact the USD in the short term.

USD/CAD - The CAD held relatively steady around the BoC policy decision yesterday but has weakened slightly overnight as stocks decline, commodities dip, and high-beta currencies tend to weaken. Overall, however, the CAD is holding up relatively well compared to the AUD and NZD. The CAD's resilience suggests there is some room for the USD to remain firm or strengthen slightly, but the potential for a significant USD rally seems limited. US short-term interest rates are retreating as markets anticipate the possibility of Fed easing in the coming months. Yield spreads are well below recent peaks, and without the support of rate differentials, the USD may struggle to exceed recent highs. US political risks for the CAD are increasing, but it's too early to predict the outcome of the presidential election.

EUR/USD - The EUR appears to be an island of stability amid rising overall market volatility. The spot rate is little changed to marginally higher today and remains comfortably within yesterday's trading range. Germany's July Ifo Business Confidence Index fell to 86.9 from 88.8 in June, below the expected slight improvement. Soft survey data this week has raised doubts about the resilience of the German economic rebound.

GBP/USD - Sterling is trading slightly softer today, but much of the broader market volatility is bypassing it. Second-tier UK data released earlier was disappointing, with the CBI survey revealing a sharp drop in manufacturing orders in July. The survey also showed slower output in the July quarter, lower selling prices, and a decline in business optimism.