USD - The dollar pared much of its weekly gains against its major counterparts as investors are encouraged by the rebound in stocks and commodities. The push higher in financial markets comes after JP Morgan's Q2 profits fell by less than expected and as investors anticipate an increase in government stimulus from China, the world's second largest economy. Meanwhile, US producer prices unexpectedly rose by 0.1% in June versus an anticipated decline of 0.4% as unseasonably dry weather pushes food prices higher. Today's reading marks the first gain in four months. With the volatile food and energy components stripped out, the core measure gained 0.2% as anticipated. University of Michigan Confidence fell short of expectations, coming in at 72.0, the lowest level this year, versus an expected gain to 73.5. Despite the souring outlook for US consumer spending, investors have been encouraged by expectations of further global central bank stimulus. As such, the dollar's attractiveness as a safe-haven asset is easing, at least for the time being.

EUR - The euro reached yet another two-year low against the dollar overnight before rebounding back towards the middle of its recent ranges. The bounce came after China released Q2 GDP figures, showing that its economy grew by 7.6%, down half a percent from the first quarter. Chinese policymakers have already eased monetary policy twice in the past two months, and today's numbers are prompting investors to bet that they will ease further. With an ever increasing number of Eurozone exports headed into China, Chinese growth is paramount to European economic success. Moreover, the slowdown in the Chinese economy is reflective of a drop in European demand as the region grapples with ballooning government debt. Overnight, Moody's downgraded Italian sovereign debt two notches to Baa2, reiterating its negative outlook for the region's third largest economy.

GBP - The pound gained to its strongest level against the EUR since 2008 as investors bet the BoE's steps to ease lending conditions will support the British economy. A new BoE program could boost credit to both companies and households by more than £80B. The pound has also found support with demand for Gilts remaining high as investors are attracted to their relative safety.

JPY - The yen continued to edge higher against its major counterparts despite an unexpected drop in industrial production. The measure fell 3.4% versus a 3.1% decline in the previous reading as overseas demand for Japanese exports wanes. However, after yesterday's surprise rate cut from the central bank of Korea, the BoJ looks comparatively inactive, which will ultimately provide support for the yen.

Commodity Currencies - The commodity linked currencies are all sharply higher this morning as the rebound in financial markets encourages a bit of risk assumption. Raw goods rallied overnight with oil rising to $87/bbl, gold gaining to $1593/oz, and copper reaching $349/lb. The CAD gained by nearly half a percent on the rising price of oil, Canada's main export. Similarly, the MXN pushed higher against the dollar as resurgent inflation will likely keep the Mexican central bank on hold as other nations ease policies. The AUD pared much of yesterday's losses even as expectations for inflation fell to a one-month low. Rather, the Aussie found support as anticipation of further PBoC policy easing boosted demand.