USD - The dollar is lower against nearly all of its major counterparts this morning, as demand for its relative safety wanes. With no major economic data to convince investors otherwise, stocks and commodities are both in the black as expectations are high that global policymakers are taking the steps necessary to support their economies. Consequently, the dollar index has fallen to a six-week low at 81.91 ahead of key housing data later this week that is expected to highlight a recovery that is gaining momentum. However, the dollar's declines will likely be limited as the general improvement in economic data will ultimately provide support as investors begin to discount the likelihood of QE3. Nevertheless, it appears that amid relatively thin summer volumes, a test of the dollar's recent lows may be in store as investors seek higher-yielding assets.

EUR - The euro rose to a six-week high against the USD in overnight trading ahead of key meetings between Greece and its international creditors. Greek PM Samaras is rumored to be preparing to request a two-year extension of the nation's bailout programs. This would give the government a much needed cushion to implement further fiscal reforms and ultimately get the nation's troubled economy back on track. Investors were further encouraged as German Chancellor Merkel's party said concessions for Greece are possible as long as Samaras and the Greek lawmakers show a willingness to adhere to the initial conditions that accompanied both of the country's bailouts. While the positive developments have provided a bit of relief for the common currency, the consensus forecast is still for the EUR to weaken throughout the second half of the year. Despite the past month's 0.3% gain, the EUR is still nearly 14% lower on a trade-weighted basis against the G10 currencies over the past 12-months. Nevertheless, demand for German assets remains historically high even with bonds returning little to no yield. German bunds have continued to gain despite the easing of global tensions largely supported by the longer-term view that the Eurozone will ultimately break up. Investors speculate that such a division would result in bunds re-denominating in a stronger currency, ultimately resulting in substantial gains. The same is true of the high demand for government assets in France, Austria, the Netherlands, and Belgium. While the speculation may seem unfounded, especially with progress being made in the region's peripheral economies, investors are still pricing in a breakup of the Eurozone with a 57% probability by the end of 2013.

GBP - Sterling is mixed this morning, gaining against the USD, while falling to a two-week low against the EUR. Though a bit of risk appetite has provided support for the GBP against the USD, an unexpected budget deficit pushed it lower against its mainland European counterpart. Estimates had been for a surplus of £2.2B after last month's £2.1B, but instead a shortfall of £0.557B was recorded. Thus, the pound will likely remain within its recent ranges in the near term, with investors largely awaiting the UK GDP report due on Friday.

JPY - The yen consolidated towards the lower end of its recent ranges this morning as demand for its relative safety eases and as the Japanese political situation appears volatile. The nation's largest opposition political party, the LDP, said that it plans to submit a censure motion against PM Noda as early as next week after he pledged to hold elections "soon" after a deal was made on a sales tax increase.

Commodity Currencies - The commodity linked currencies are generally higher this morning, benefitting from the return of appetite for riskier assets. Raw goods are sharply higher with oil rising to $97/bbl, gold at $1637/oz, and copper jumping to $347/lb. The CAD continued to push higher, finding support in the rising price of oil, Canada's primary export. Similarly, the MXN has advanced after data showed the nation's international reserves unexpectedly fell to $1.59B from $1.60B in the previous reading. The AUD rose after minutes from the central bank saw domestic growth outpacing the "fragile global outlook" and stopped short of proposing measures to limit the AUD's gains