USD - The dollar is mixed this morning, gaining against most of its G7 counterparts while falling versus its higher yielding peers. The dollar and growth-oriented currencies are performing well as investors pare their bets of a global economic slowdown. The better-than-expected pace of growth in the US is also prompting the market to pull back some of its expectations of imminent Fed action. This morning, private payrolls provider ADP released its monthly gauge of private sector jobs growth with the number outpacing expectations at 201K versus an upwardly revised reading of 173K last month. Meanwhile weekly jobless claims fell to their lowest level in a month at 365K. Both releases are encouraging ahead of tomorrow's all-important nonfarm payrolls and unemployment reports, which will likely play a significant role in determining the Fed's timeline for possible further monetary easing. Elsewhere, ISM non-manufacturing came in higher than expected at 53.7 versus a consensus forecast of 52.5. Nevertheless, the dollar will likely remain range-bound ahead of tomorrow's significant data releases.

EUR - The euro has pulled back from significant early gains as the ECB's lowered assessment of the regional economy outweighs the Bank's plan to buy bonds in Italy and Spain. ECB President Draghi announced that the Bank will purchase sovereign bonds in the region's struggling economies with maturities up to three years, and more importantly, the ECB will not hold senior status. The details have led yields on Spanish and Italian bonds lower this morning, but it remains to be seen if lower borrowing costs engender an increase in lending at the consumer level. With the plan unlikely to spur immediate growth, the central bank is now forecasting a regional economic contraction of 0.4% for 2012 instead of a 0.1% shortfall that was expected at their last assessment. Consequently, the euro has come off its recent highs, but remains towards the top of its recent ranges. Continued deliberations in Germany regarding the approval of the region's permanent "bailout" fund, the ESM, are also undermining investor confidence. While President Draghi didn't explicitly address it, the ECB likely won't begin its bond-buying operations without coordination from the ESM/EFSF. Reflecting the continued negative outlook, an industry survey released this morning showed that a majority of investors expect Spain to seek a sovereign rescue in the twelve months while Italy will avoid the same fate. Nevertheless, in this case action was better than inaction, and signs that policymakers are finally being proactive will likely provide support for the common currency in the near term.

GBP - Sterling is stronger against both the USD and EUR this morning after the BoE kept interest rates on hold. Even as UK house prices fell by more than expected, the pound has found support as investors pare bets of further monetary easing from the central bank.

JPY - The yen is sharply lower this morning as improved investor sentiment weighs on demand for the JPY's relative safety. The yen also came under pressure as investors increasingly expect central bank intervention as policymakers step up their rhetoric on the ill-effects of a strong yen. However, with this morning's declines against both the USD and EUR, Japanese officials are likely breathing a collective sigh of relief.

Commodity Currencies - The high-yielding commodity linked currencies are stronger this morning as investors assume riskier positions. The CAD has soared to a fresh five-month high against the dollar as today's US jobs data, Canada's primary trading partner, bodes well for tomorrow's NFP and unemployment reports. The loonie has also found support in the higher price of oil as production remains slow along the Gulf coast after Hurricane Isaac. The AUD snapped three consecutive down days, recovering much of its weekly losses versus the dollar as investors seek its G10-leading yields. The ECB's plan to directly buy sovereign bonds has sparked a return of risk appetite. The Aussie was also helped higher after the Australian unemployment rate unexpectedly fell to 5.1% versus an expected increase to 5.3%.