USD - The dollar is lower this morning against most of its major counterparts other than the JPY as stocks and commodities extend their post-NFP rally. With no new major economic data due out of the US, markets are taking their cue from overall strong corporate earnings and an improving outlook for the US economy. However, while supportive labor market data may keep the Fed sidelined through the summer, policymakers are clearly still concerned with the pace of growth. Boston Fed President Rosengren told reporters today that the central bank should pursue an "open-ended" QE program of "substantial magnitude." He went on that "without new stimulus, the jobless rate would rise to 8.4% at the end of this year and economic growth wouldn't exceed 1.75%." The Fed will have another NFP and unemployment report before their next meeting on September 13th. Further stimulus measures would not be surprising should the unemployment level continue to edge higher, but for now investors appear confident that the global economic situation is improving.

EUR - The euro is back towards the top of its recent ranges as German policymakers appear tolerant of the ECB's bond-buying plan. While Chancellor Merkel is still on vacation, a spokesman for her office told reporters that Germany is "not worried" by Draghi's plan in the first official reaction following the ECB meeting. While Germany's lack of worry is far from an endorsement, investors are relieved that the reaction wasn't outright rejection. Meanwhile, Italian GDP contracted by less than expected, dropping by 0.7% vs. 0.8% in the previous reading. However, on an annualized basis, the economy has shrunk 2.5%. Moreover, Italian industrial production more than erased last month's gains, dropping 1.4%. Similarly, German factory orders fell 1.7% as foreign demand for European-made goods faltered. Nevertheless, there have been no requests for ECB bond buying as of yet with the yield on 10-Yr Italian bonds easing back below 6% on their own. Investors' appetite for European assets remains surprisingly strong with the common currency now near its strongest levels against the dollar in more than a month. However, an appreciating currency threatens to stymie demand for the region's exports even further. While there may be little pressure on policymakers during the slow summer months, European exporters would surely prefer to see the EUR at lower levels heading into the final third of the year.

GBP - Sterling rebounded overnight after a government report showed industrial output fell less than expected, but the GBP has since pared some of its early gains. Output fell by 2.5%, less than the 3.5% that was expected, but still far short of last month's 1.0% gain. Manufacturing registered similarly, dropping 2.9% versus a larger 4.3% contraction that was anticipated. Despite the better-than-expected numbers, the GBP's upside will likely remain limited as the data was far from positive enough to keep the BoE sidelined in the months ahead.

JPY - The yen came under pressure overnight as risk appetite continues to gain momentum. The ultra-low yielding JPY also weakened as the BoJ extended the maturity of a program providing cheap dollar funding to Japanese corporations looking to buy foreign entities.

Commodity Currencies - Commodity linked currencies are generally higher this morning as investors look for greater returns. Oil gained to $93/bbl, copper rose to $344/lb and consumables were generally higher. The CAD has once again broken below parity with the USD as the rising price of oil - Canada's main export - and the improved risk sentiment are providing support. Similarly, the MXN is stronger as the rising price of oil boosts the outlook for Mexico's export market. The AUD has pulled back after reaching a five-month high against the USD overnight after the RBA kept interest rates on hold. The central bank cited an improved outlook for the Australian economy with the Chinese market showing signs of bottoming, but policymakers did voice their concern with a strong AUD. As such, investors are not completely discounting further rate cuts despite improved economic conditions.