Stock futures are consolidating near their highs ahead of the release of the US employment report in just under an hour after absorbing the official results of the US stress tests of the biggest banks. Several banks have already announced plans to launch secondary stock offerings and the market has taken the news in stride.
Yields continue to push higher as the economy shows clear signs of bottoming out. US 10-year notes are up to 3.37%. USD/JPY, in particular, will benefit from the higher yields given the capital surplus in Japan.
As I wrote yesterday, my sense is that the employment report is less important today than normal in that employment is seen as the last sector to turn up after a recession, so a weak number can easily be explained away. The passing of the even risk rather than the outcome itself is probably the most important thing this morning.
As Gerry noted, Chinese sales of EUR/USD are keeping lid on that pair intraday. Commodity currencies are well supported, led by the Loonie today after the strong Canadian employment report. The 200-day moving average in EUR/USD comes in at 1.3461 today. That average capped the rally at 1.3470 yesterday.