Sales of new homes in the US plunged 14.5% in March to 384,000 annualized units, the lowest level in eight months. The 14.5% decline was the 3rd biggest monthly drop in 20 years, with the larger declines seen in July 2013 and May 2010 at -17.1% and -33.5% respectively. Full charts & analysis here

Solid US data made for a choppy market as traders returned from a long weekend. The Aussie dollar was tops while the Canadian dollar lagged. Australian CPI and the Chinese manufacturing PMI are major events in the hours ahead.  

A measure of G7 FX volatility from JPMorgan fell to the lowest since 2007, in a concrete measure of what many traders are lamenting at the moment. But nothing points to impending volatility like a quiet market. Once complacency give way momentum traders erupt. EUR/USD is particularly quiet with only a 1.25% range in the past two weeks. A hint at change in the BOJ or ECB could get the pair moving.

The market is also looking for a better sense of the strength of the US economy. The April Richmond Fed was at +7 compared to +2 expected. Existing home sales also edged estimates at 4.59m vs 4.56m expected but it was the lowest reading since July 2012.

A WSJ story didn't get the market's attention but it could prove important. Citing sources, it said the BOJ could upgrade its inflation forecast – something that would severely diminish the chance of further easing.

In any case, market are likely headed into a higher gear in the hours ahead with Australian Q1 CPI due at 0130 GMT. The consensus is for a rise to 3.2% on headline inflation and 2.9% on the trimmed mean. A higher or lower reading is sure to jolt AUD.

But the initial move might be restrained by the China PMI from HSBC due 15 minutes later. The preliminary reading is expected to tick higher to 48.3 from 48.0 but remain solidly in contractionary, sub-50 territory.

If both releases point in the same direction, a big move in Australian dollar could be coming. 

The Japanese government is instigating changes at its massive public pension in a move that could take pressure of the BOJ. In light trading Monday, the Canadian dollar was the top performer while the kiwi lagged. The Japanese and Australian leading indexes are the lone items on the upcoming calendar.

Japan may look to spur growth by re-allocating its $1.2 trillion pension fund rather than BOJ stimulus – at least for now. On Friday, the government said it planned changes and today it delivered by appointing 7 new members to the 11-person pension investment team.

Several of the appointees have argued for steering investments into more dangerous assets from the traditionally domestic-bond-heavy portfolio. Changes won't be dramatic but they may push out the timeline for BOJ easing, especially as policymakers take their time evaluating the consumption tax.

Elsewhere,  the New Zealand dollar has been under pressure for the past 10 days. A large part of the reason is falling milk prices  and that's a trend that threatens to continue. In the near-term, however, the focus will shift to the RBNZ decision on Wednesday. All 15 economists surveyed by Bloomberg expect Wheeler to hike so hawkish/dovish comments will be key. Look for moves on pre-decision positioning in the 24 hours ahead.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

• EUR +28 vs +23K prior
• JPY -67K vs -87K prior
• GBP +51K vs +46K prior
• AUD +8K vs +3K prior
• CAD -35K vs -34K prior
• CHF +14K vs +11K prior
• NZD +20K vs +20K prior

The notable move is in the yen where long-term bears are beginning to clear out. The crux of their case was that the BOJ would ease shortly after the consumption tax hike but that's growing less likely. Ex-gov Suto was on the wires Monday say the BOJ is likely to wait until hitting its targets is impossible before taking action. 

A better tone on Ukraine pushed up Treasury yields after all parties agreed separatists would exit government buildings. USD was the top performer while NZD lagged. The day ahead is likely to be extremely quiet with many markets closed for Good Friday.  

A prevailing school of thought headed into the weekend was that risk trades might suffer on fears of a Ukranian flare up over the long weekend. Instead, leaders emerged from four-party meetings with a conciliatory tone. The largest impact was in the Treasury market where 10 year yields moved up 9 basis points – the most since the FOMC decision on March 19.

Higher yields fuelled US dollar buying across the board. The correlation with yields and USD/JPY is notable and with Kuroda opening the door to further easing on Thursday, the upside is considerable. Dollar buying was also supported by the Philly Fed at +16.6 compared to +10 expected. Initial jobless claims were at 304K versus the 315K consensus. Most of this week's economic data was dollar positive, especially retail sales and CPI.

The euro was particularly soft after Mersch warned of the growing likelihood of cuts due to the higher euro and a Reuters source said Weidmann was open to QE in the right circumstances.

One currency that kept pace with the US dollar was the loonie after Canadian CPI was higher than expected. It's the second month of strong inflation numbers and talk of rate cuts is dwindling.

The key for the next stage of growth in North America is business investment. Corporate earnings are a spot to watch and so far it's a mixed bag as companies continued to wait for better signs of growth before putting cash to work.

The pound was the top performer while the yen lagged as risk trades strengthened. Later, Kuroda and several second-tier releases highlight the calendar.

USD/CAD rose about 40 pips following the Bank of Canada decision.  The BOC maintained a slight dovish bias but there was nothing in the statement that screamed to buy the pair. If anything, across-the-board higher inflation forecasts due to rising energy prices and a softer loonie were a reason to sell USD/CAD.What stood out was the BOC emphasis that a pickup in exports and business investment is required to spur a sustainable recovery. The thing is, Poloz has been looking for that since he started at the bank and it hasn't come.

The BOC has expressed befuddlement and trend. All the elements are there, they say, but it's just not happening. Higher competition and offshoring help explain the export weakness but slow business investment is a problem in all developed countries.

Central banks have been wrong about investment for awhile and if it never truly materializes, all trades based on higher interest rates are at risk.

The Fed was also in the spotlight but Yellen revealed very little. The market was worried about hawkish commentary like we saw after the FOMC but there was nothing to hint a higher rates. She pointed to data and said downside risks to inflation are her chief concern.

The Beige Book noted a consumer spending pickup and that's a key factor for the near-term US outlook. Without spending (and business investment) sustainable new jobs will never materialize.

Up next, at 0000 GMT, BOJ leader Kuroda speaks and could offer some dovish hints. That's because the Japanese cabinet is rumored to be downgrading its economic assessment today for the first time since 2012. That's often seen as a precursor to central bank action.

At 0130 GMT, the quarterly business conditions index from the National Australian Bank is due. The prior reading was 8.