USD - The dollar is mixed this morning, falling lower against many East Asian and Scandinavian currencies while pushing back to the top of its recent ranges against its other major counterparts. Stocks and commodities have generally extended yesterday's rally even as economic data came in mixed. Existing home sales registered slightly better than expected at 4.62M versus 4.47M in the previous reading, the first gain in three months. The strong reading is an encouraging sign for the US economy as employment gains, depressed prices and record-low mortgage rates ease conditions for home buyers even as global economic woes weigh on sentiment. However, the Richmond Fed manufacturing index came in sharply lower than expected with a reading of 4 versus 14 in April. The figure comes after the Philly Fed index fell to -5.8 late last week, suggesting that the rebound seen in the manufacturing sector throughout the first quarter may be losing momentum. Fed policymaker Lockhart told reporters yesterday that the FOMC needs to keep the option of additional QE on the table in light of the recent soft data, and that while further easing is not yet needed, that could quickly change should conditions in the Eurozone worsen. In light of the recent weakness in manufacturing, the Fed's increasingly dovish rhetoric will make it difficult for the dollar to post further sustainable gains, at least in the near term.

EUR - The euro consolidated within its narrow ranges overnight as investors remain sidelined before an informal EU summit on Wednesday. All eyes will be on French President Hollande and his pro-growth strategies, rather than further austerity. Papers are reporting that Hollande plans to push for a joint liability issuance of bonds, a move that German Chancellor Merkel has repeatedly scoffed at. While no major shift in policies is to be expected, the summit will go a long way in highlighting the tenuous Franco-German relationship, and whether Chancellor Merkel is willing to shift the German stance on austerity. While signs of cooperation may support a semblance of risk appetite in the near term, the OECD warned today that the region's ongoing debt crisis risks seriously damaging the world economy. The risk is increasing of a vicious circle, involving high and rising sovereign indebtedness, weak banking systems, excessive fiscal consolidation and lower growth. The group also urged the ECB to stand ready to resume buying government bonds of struggling Eurozone member nations.

GBP - The pound is mixed this morning, gaining against the EUR while falling against the USD on speculation that the BoE will have to increase stimulus. The IMF suggested that the BoE pursue further monetary easing to support the struggling UK economy and consider budget stimulus measures and temporary tax cuts. In addition to further QE, IMF Director Lagarde stated that there is room in terms of interest rates that could be used as well suggesting the BoE cut rates from their current all-time lows of 0.5%.

JPY - The yen dropped against the dollar by the most in a month after Fitch unexpectedly downgraded Japan's credit rating. The ratings services said that Japan isn't acting quickly enough to tackle its mounting public debt burden, but they did commend the nation on its strong pace of growth in Q1. The cut comes as the BoJ starts its two-day policy meeting, thus stoking expectations that the Bank will pursue further monetary easing. Nevertheless, the yen remains supported below the key 80.0 barrier as investors remain generally risk-off.

Commodity Currencies - The commodity currencies are mixed this morning with the CAD and MXN remaining largely flat while the AUD and NZD push lower. Raw goods consolidated within recent ranges overnight with oil at $92/bbl, gold slipping to $1589/oz, and copper gaining to $351/lb. The CAD is marginally higher this morning, supported by increased hopes that European and Chinese officials will be proactive in supporting their respective economies. The CAD and MXN are also both higher this morning after the encouraging housing data out of the US, the main destination for Canadian and Mexican exports. The AUD and NZD both pared overnight gains as risk appetite remains tepid at best. The Aussie also came under pressure as the OECD predicted that Australian unemployment will reach the highest levels since 2009 as industries outside of the mining sector struggle with a strong Australian dollar