The US Dollar is recovering slowly after having recorded a sharp decline on Friday. Traders are trying to let the dust settle in the aftermath of the disappointing US jobs report. Helping the USD advance against the euro was weaker German data this morning and against AUD where the central bank raised rates but hinted that it could be their last.

On the data front, a few more data points after a very calm Monday. The US trade balance data will be a good indicator to see how the US trade deficit is behaving. Speeches from Fed Governor Christopher J. Waller and New York Fed President John C. Williams might deliver some more interest-rate guidance to the markets.

Top Fed official Neel Kashkari has stated he would prefer to err on the side of overtightening monetary policy "undertightening will not get us back to 2% any time soon."

Equities notched a small gain Monday with the Nasdaq earning its seventh straight positive session for the first time since January. Both the S&P 500 and Dow Jones were higher for the sixth straight session.

EUR/USD is grinding lower on the day helped by weaker German data. In a risk adverse market this tends to help the USD recovery story as market eyes will be looking to Fed officials comments for direction. The expectation of an extended pause by the ECB certainly helps this move lower.

USD/CAD has extended its recovery this morning helped be a general risk off tone. Economic developments in Canada appear to be less constructive. A more dovish path by the BofC is expected due to slow growth and lower commodity prices.

GBP/USD is under pressure this morning and has dropped below a key market level. Investors risk appetite in this pair appear to diminishing. Expectations of the UK entering a recession appear to be ticking up as many sectors are struggling to absorb the interest hikes by the BoE. Similar theme of general USD strength applies to cable.

USD/MXN The peso is trading higher in todays session on the back of USD strength across the board. MXN is the leader in the EM space as of writing this piece. Banamex survey of economists is out later today and should give some color around macro factors.

USD/BRL same tone where the USD has gained this morning helped again by Brazils 50 basis point rate cut last week. Similar theme of higher inflation and an adverse global outlook. EM pairs are under pressure.