Morning Bid: Canadian dollar calm as Trudeau heads for the exits

Jan 6 (Reuters) - A look at the day ahead in European and global markets from Wayne Cole.

Markets have mostly been on a random walk in Asia, punctuated by reports embattled Canadian Prime Minister Justin Trudeau might announce his resignation as early as today.

The muted market reaction suggested the news was priced in and investors could welcome the chance of an early election to clarify the outlook, nudging the U.S. dollar down 0.3% to 1.4404 Canadian .

The dollar was also off a shade on the other majors, but underpinned by Treasury yields as the 10-year got within a whisker of its recent eight-month high of 4.641%. A break of that would target the 2024 peak at 4.739% and further challenge equity market valuations.

While the S&P 500 returned 25% last year, it was built on a very narrow base with almost half of that from just five stocks.

Japanese bond yields were also on the rise, reaching levels not seen since 2011 at 1.121%, as markets assume the Bank of Japan will hike sometime soon, even if not this month. Unfortunately for the yen, Treasury yields have been rising faster to keep...
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