USD-JPY rallied modestly on the back of the BoJ's downgrading of the Japanese economy, little in the way of resistance noted on the way up. Talk of Japanese offers at 125.50 and higher though, provided a convenient level for specs to offload accumulated longs.
Elsewhere, AUD-USD was unable to hold gains over 0.5100, light fund selling reported over the figure. USD-CAD rallied early as European buyers sold the C$ahead of tomorrow's BoC meeting (25 bp cut seen), but apparently, Canadian exporter accounts along with IMM players took advantage of the move over 1.5400
On tap Tuesday, June capacity utilization and industrial production data is out, though we expect lethargic FX trade to continue until Wednesday's Greenspan testimony.