POWER: UK Raises AR7 Strike Prices for Wind

• Around 40k lots goes through in Bund as the contract dips lower, not seen a new trigger, but a clear pick up in Volumes in that 10 minutes period.
• This is a more Bond related move, with Equities and EUR Rates unmoved.
• Initial support is seen at 130.47.

EUR swap spreads are little changed to lower vs. late Monday levels,

• The space seems more attuned to broader macro moves surrounding geopolitical matters and German fiscal developments than yesterday’s H225 EU funding plan.
• The latter outlined EUR70bln of bond issuance, around the lower end of expectations. Note that details of the plan did not make reference to higher defence spending through the SAFE programme.

• USD/JPY's reversal off the weekly high has held well, with spot returning to well within range of the Y145.00 handle having traded Y148 at the high yesterday. The remarkable about-turn, triggered by the announcement of a Israel-Iran ceasefire, has looked through early signs of fragility. Israel detected inbound missile strikes, which have been denied via state-run Iranian media.
• This keeps the USD weaker on the day, buoying GBP/USD and EUR/USD through 1.36 and 1.16 respectively, as rallies remain shallow. Geopolitical risk remains the primary focus, however markets seem to be of the view that we're through the worst of the Middle-east tensions and there's a relatively minimal risk of an oil price spike hereon.
• Becalmed commodities markets are allowing risk proxy currencies to outperform. As such, AUD and NZD are easily the best performers in G10, tipping both AUD/USD and NZD/USD back into the uptrend channel dtrawn off the May lows.  
• Canadian CPI data is a calendar highlight Tuesday - particularly as USD/CAD reversed hard off highs on the challenge of the 50-dma this week. This brings today's CPI release into sharper focus, particularly given the  partial pricing for a July 30 rate cut (OIS sees just over 1:3 probability of a 25bps cut) as well as the now-prolonged trade talks with the US, on which Carney stated yesterday his government are still focused on after an overnight call with  Trump.