The U.S. dollar is trading near its best levels for the week against the euro, Swiss franc and sterling ahead of ECB and BOE meetings, and U.S. ADP and service ISM. New market moving developments are scarce and the market has largely traded within the ranges set at the end of last week. The Australian and Canadian dollars have seen some follow through gains in recent days, but this is the exception to the general rule.

News that funds for Spanish banks will not be available on July 9th as initially anticipated and may not be ready until July 20th, and Finland's insistence on collateral for Spanish access to EFSF/ESM, coupled with the new ECB collateral rules have undermined Spanish bonds, with the benchmark 10-year yield rising more than 20 bp and the 2-year yield up 25 bp, in a bearish curve flattening. Italy's 2-year yield is also up more