USD - The dollar is headed into the weekend lower against all of its major counterparts as progress at an EU summit has sent both stocks and commodities higher. The DJIA is up nearly 1.75% and commodities are generally more expensive even as US data missed the mark. Personal income and spending both registered in line with expectations at 0.2% and 0.0% respectively, but University of Michigan confidence data fell short of forecasts at 73.2. Meanwhile, Fed policymakers appear to be increasingly dovish with NY Fed President Dudley telling reporters this morning that the central bank will act again, if needed. Dudley also said that employment growth has clearly slowed of late and that the economy has lost momentum. As always, with inflationary pressures easing and the economy clearly faltering, the prospects of further Fed stimulus will weigh on the dollar in the near term. However, its recent losses may prove to be short lived as the bump in risk appetite appears based on lofty expectations and little detail.

EUR - The euro jumped nearly 2% against the USD this morning after EU policymakers reached a deal and the final hours of a two-day summit. The plan is three fold. 1) The EFSF and ESM will be allowed to inject capital directly into Eurozone banks. 2) The ESM will no longer hold senior creditor status over the private sector. 3) The EFSF and ESM will be used in a flexible and efficient manner to stabilize markets. However, with the current pledged value of the EFSF and ESM combined being only €500B, today's plan would still do no good should Spain or Italy require substantial financial assistance. Furthermore, in order for the first point to be implemented, a single supervisory mechanism must be put in place, meaning the region's national governments need to cede control of each banking sector to an overarching EU body. As has been the case since EUR unification, issues of sovereignty are never easily overcome. Nevertheless, with such overwhelming expectations of failure ahead of the summit, the modicum of progress has provided a much needed jolt of support for the common currency. As such, a retesting of its recent highs at 1.2718 may be in store in the near term. However, with the EU summit in the rearview mirror, investor attention will quickly hone in on next week's ECB meeting at which the Bank is widely expected to cut interest rates.

GBP - The pound is sharply higher this morning against the dollar, while falling versus the EUR as risk appetite improves. However, gains in the sterling will likely remain limited in the near term as investors price in further easing from the BoE after yesterday's disappointing reading of GDP at -0.2% YoY.

JPY - The yen is the only major currency performing worse than the dollar this morning as the risk-on trade saps demand. While Japanese officials are surely pleased with the recent weakening as it eases pressure on the nation's exporters, continued economic uncertainty will keep it within its ranges in the near future.

Commodity Currencies - Commodity linked currencies have benefited the most overnight from the uptick in risk appetite as raw goods extend yesterday's gains. Oil surged 6% to $82/bbl, gold rallied to $1597/oz, and copper rose to $347/lb as the recent dip in prices appear quite attractive with sentiment rebounding. The CAD gained by the most in a year as the EU deal supports risk demand. The surging price of oil, Canada's main export, is also pushing the loonie higher against its peers. Similarly the MXN gained by the most in sixth months after the Anheuser-Busch InBev group agreed to buy the remainder of Mexican brewing giant Grupo Modelo for $20.1B, which will ultimately settle in peso. The AUD and NZD are both higher this morning as the improvement in sentiment has prompted a bit of risk taking. With relatively high interest rates, the Aussie and Kiwi are both particularly attractive as rates elsewhere amongst the G10 nations converge near 0%. The ZAR proved to be the biggest winner overnight, with a majority of South African exports headed to Europe.