Pound Stumbles, Yen Crosses Correct

Optimism about a deal in Iran didn't last as US pending home sales slipped. The US dollar and NZD were the top performers while sterling lagged. Look for swings in the Nikkei to continue to drive and confirm USD/JPY trades with the calendar quiet.

The trade to start the week was relief on a tentative deal to dissolve Iran's nuclear program but declines in oil and gold slowly faded. Optimism in stocks and yen crosses also faded.

The largest move was in GBP/JPY, a pair that has attracted fast money traders amidst the volatility in the past week after the breakout last week. On Monday, the pair crested at 165.28 then fell 100 pips beginning European trading.

The slump weighed on cable as it fell to 1.6130 from as high as 1.6240 at the start of the week. Helping the move along was a 2.2% decline in pending home sales compared a 1.0% decline expected.

A sub-plot was a comment from SNB Chairman Jordan who raised a sliver of hope of removing the EUR/CHF floor. He said CHF was massively overvalued in 2011 and said he is convinced there was no alternative to the peg. He added that today there is no reason to drop the cap but the lack of strong, definite rhetoric and the past tense could be a signal the floor won't last another year.

The lone item on the calendar is at 0500 GMT with the Japanese small business confidence index. The prior reading was 50.8.