It seems as though equities will hitch a ride on the coat tails of gains at Wells Fargo, which earlier announced profits at least twice what analysts had looked for. Much is also being made of the New York Times article discussing the outcome of the so-called stress-tests for banks. Those are the results of a federal examination of the health of 19 of the largest U.S. banks under a scenario of the worst case scenario of 10.3% unemployment and flat growth next year. What we’re learning is that the stress testing will not award a pass/fail grade. Rather it will award pass marks all round subject to capital infusion either from private investors tempted into one final post mortem investment or failing that from taxpayer money. The article is less bullish or at least more sober than the pre-market futures are so keen to price in. The dollar is broadly weaker though with the exception to the rule being a weaker euro today ahead of a long European weekend.

Investors seem to be cautious towards the euro. Today, Austrian central bank head and council member of the ECB, Ewald Nowotny said that further easing of monetary policy might be up for discussion going forward. He also suggested that it made sense for the ECB to buy corporate bonds. These two items are the final bastions of hope that have set the single euro currency aside from other currencies as the war on recession grows. Now, dealers have to contend with the lingering ‘what-if’ surrounding the prospects for the euro.

Despite a hefty stock market rally, data continues to detract from its sphere of influence. In both cities of London and New York commercial property brokers have expressed alarm at the rising square footage of empty office space. Partly to blame is the fact that boutique investment firms have been charred beyond recognition and have been carried out of their offices light on capital, many never likely to return.

The Fed’s minutes expressed concern over the notable and pervasive decline in the performance of foreign economies since January, when the minutes of the recent FOMC meeting were released yesterday. Confirmation of this came in today’s slimline trade deficit, where export volume grew by 1.6% but the slide in imports created a $26 billion overall trade deficit. The American consumer stopped buying practically everything with the import of Japanese made cars at their weakest since 1996.

Besides the post-Lehman failure shock to consumption, unemployment continues to climb and is crimping consumption habits. It’s hardly a U.S. specific problem either. This week and for the 10th consecutive week, initial unemployment claims remained above a 600,000-count. North of the border in Canada, today’s reported loss of 61,300 exceeded the 50,000 job losses predicted and drove the unemployment rate up from 7.7% to 8.0%. In Australia, analysts also under estimated the degree of job losses despite the fact that the domestic economy has felt less strain than the rest of the world. Unemployment rose to 5.7% missing the 5.4% prediction as employers cut more jobs than anticipated.

Still, both Australian and Canadian dollars are feeling the afterglow in today’s trading felt from the embers of the Wells Fargo report, which is likely to remain the case as trading winds down for the long weekend. The Aussie unit buys 71.93 U.S. cents, a penny more than yesterday while Canada’s dollar buys 81.60 U.S. cents. The Australian dollar is currently displaying a typical or predictable pattern at present. The weak domestic data is creating a knee jerk sell off before reversing. The unit seems predisposed to sharing a greater fondness for bullish U.S. market news than it does a dislike for more sensitive domestic news.

In the United Kingdom the Bank of England kept interest rates at 0.5% as expected and maintained a commitment to keep buying British government debt having bought around one-third of the £75 billion they initially set out to buy over the current quarter. The pound likes the warmer waters today, trading in line with equity markets and is a shade higher against the dollar at $1.4710 while the euro buys marginally fewer pennies at a rate of 90.14 today.

Implied currency market volatility is meanwhile dissipating in line with the pattern displayed in equity markets. The Vix index measuring the cost of options on S&P 500 index components closed beneath a reading of 40 yesterday for only the second time since January 6th. Currency implied volatility is also calming with less demand for protection against a wild swing brought on by economic crisis.