EUR - The euro has retreated from early gains after Spanish PM Rajoy and French President Hollande met to discuss a potential Spanish request for financial assistance. While the talks were cursory to any formal request, it appears Rajoy came away from the meeting comfortable with the status quo. However, Rajoy and Hollande urged the ECB for more clarity on their proposed sovereign debt buying scheme so that further plans can be laid. "In the same way as when we asked for the help for the financial sector because we thought it was good for Spain...when it's known exactly what's on offer, I will make a decision," said Rajoy. However, the onus likely lies on German policymakers who have balked at the plan to intervene in sovereign debt markets. President Hollande took a jab at his German counterparts, telling reporters to not "count on me to make it even more complicated for President Draghi to carry out his responsibilities." However, the pro-growth French leader is facing problems of his own with his 100-day popularity rating plunging to lowest on record for a French president. Next week's ECB policy meeting will thus be closely watched. The Bank likely won't be able to implement its bond-buying program prior to the final approval of the ESM and a region-wide banking authority. However, investors are clearly expecting further details on the requirements target nations need to meet before the ECB will even consider intervening. Meanwhile, a report this morning showed Eurozone consumer sentiment falling by more than expected and German unemployment unexpectedly rising. With it clear that it's not only the periphery economies that are struggling, the EUR will likely remain under pressure in the near term
GBP - Sterling is lower against both the USD and EUR this morning as falling stocks and commodities sap risk appetite. However, the pound remains towards the higher end of its recent ranges as investors pare bets that the BoE will ease policy further at their meeting next week. While the British economy continues to struggle to grow, policymakers made it clear that it will "take some time" for the Bank's policies to have the desired economic impact.
JPY - The yen pared much of its weekly losses overnight as investors sought its relative safety. With global central banks increasingly looking like they will remain on hold, stocks and commodities are breaking lower. And while the Japanese economy has hurdles of its own to overcome, it appears that Japanese corporations are adapting. A report this morning from auto giant Nissan showed that for the first time in the company's history, cars manufactured abroad are being shipped to Japan for sale in the domestic market.
Commodity Currencies - The commodity linked currencies are generally lower this morning as falling stocks prompt investors to shed riskier positions. The CAD weakened for a second straight day as Canada reported the widest current account deficit in nearly two years as exports fell. Similarly, the AUD is lower this morning on signs that demand for Australian exports is drying up.