USD - The dollar has pared early losses, but remains towards the bottom of its recent ranges against most of its counterparts. While sideways trading has prevailed over the past several weeks, investors will get a broad assessment of the global economy in the coming days with US labor market data and an ECB decision highlighting. Fed Chairman Bernanke may have stopped short of unveiling a third round of quantitative easing during his much?anticipated Jackson Hole speech, but this week's nonfarm payrolls release will have significant implications for Fed policy through the end of the year. With most expecting policymakers to remain sidelined as the presidential election race heats up in Washington, the Fed could reassert its independence and ease policy further should the jobs numbers reveal a significant decline. Ahead of Friday's nonfarm payrolls and unemployment reports, investors will take note of PMI manufacturing, ISM manufacturing and construction spending all due this morning. The middle of the week sees a measure of productivity and costs on Wednesday and weekly jobless claims, ADP payrolls, and ISM non?manufacturing all on Thursday. Consequently, the dollar will likely remain within its recent ranges ahead of this Thursday's ECB meeting and Friday's employment data and in the run up to the Fed's next meeting on September 12?13.

EUR - The euro remains towards the top of its recent ranges as investors appear hopeful that the ECB will provide further clarity on its bondbuying scheme announced at their last meeting. However, with many eyeing ECB President Draghi as the savior of the EUR, it will be difficult to meet the high expectations. ECB policymakers and Eurozone leaders have been working overtime to avert further declines in investor confidence while also fostering a return to economic growth. Draghi reiterated in an op?ed over the weekend that "exceptional measures" are justified under the ECB's mandate when markets are "influenced by irrational fears." Further, clarity over the preconditions Eurozone members would have to meet before the Bank bought their bonds would go a long way towards assuaging investor fears, but it's likely not the panacea that many are hoping for. ECB intervention will drive yields in Spain and Italy lower in the near term, but it's unlikely that that will translate into increased lending and get either economy moving. Further dimming the outlook for the region, Moody's Investor Services downgraded the outlook for the EU's credit rating to negative overnight after similarly cutting the outlook for France and Germany earlier in the year. As such, the common currency will likely remain towards the top of its ranges ahead of Thursday's meeting.

GBP - Sterling has reversed early week gains against both the USD and EUR this morning after UK PMI construction data fell short of expectations. However, the pound's declines have been limited as investors continue to pare bets that the BoE will be forced to ease policy further. The relative central bank hawkishness is thus providing support as investors eye further easing from both the ECB and Fed in the coming weeks and months. In the lead up to Thursday's BoE meeting, investors will take note of a British House Price Index and PMI services, and then eye industrial production, manufacturing and PPI data to close out the week.

JPY - The yen has edged lower this morning against most of the majors, but remains well entrenched within its recent ranges. With investors expecting further central bank easing around the world, the opportunity cost of holding ultra?low yielding JPY denominated assets is significantly reduced. However, further appreciation could spark another round of BoJ intervention with Japanese officials continually citing the strong yen as one of the primary roadblocks to the Japanese economicrecovery.

Commodity Currencies -The commodity linked currencies have rebounded from overnight losses, but remain relatively well supported as investors remain optimistic. Energy and metal prices are modestly higher, while Hurricane Isaac has brought some relief to the droughtstricken Southeast, which in turn is driving prices on consumables lower. The CAD renewed its advance this morning, retesting its recent highs against the USD, finding support in the higher price of oil - Canada's main export. The AUD reversed early losses after the RBA kept interest rates on hold, citing that strong domestic demand is providing sufficient support for the economy even as the slowdown in China and Europe limits exports. Despite Australia's reliance on foreign demand for its commodity exports, policymakers have been proactive in fostering a diverse economy, one which has avoided recession for more than two decades. While investors are pricing in a RBA rate cut at next month's meeting with a 60% probability, that's down from 70% just one day ago, and will likely decline further as the month progresses.

MXN - The Mexican peso remained little changed since last week's close of 13.1800 per dollar level and fluctuated over the long weekend as details of a bond buying plan from the ECB emerged. In morning trades, the peso took gains as speculation President Mario Draghi will announce measures for the ECB as soon as this week.

RMB - The Chinese renminbi is slightly weaker this morning, reversing some of the rally from yesterday's PMI data. Official and private manufacturing PMI data fell to 49.2 since last year's reading of 50. HSBC manufacturing PMI fell to 47.6, the weakest level since 2009.