This morning’s better than expected U.S. Non-Farm Payrolls data has put risk back on the table. Although this report showed that the economy was still shedding jobs, private sector hiring was above the consensus, driving investors into equities and out of gold and Treasuries.

The shift in risk sentiment is driving the U.S. Dollar lower especially against the commodity-linked currencies. The Japanese Yen is also getting punished as traders leave the safety of the lower yielding currency.

Upside momentum is building in the Australian Dollar, putting it in a position to test the early August top at .9221. Recent economic data has also led to speculation that the Reserve Bank of Australia will raise interest rates at its next meeting on September 7.

The USD JPY is trading sharply higher this morning. The rise in demand for stocks appears to be reviving the carry trade. This is a situation where investors borrow the lower yielding Yen then sell it to invest in higher yielding assets. The chart pattern suggests a possible double-bottom formation. This pattern will be confirmed if 85.90 is broken and at the same time will signal a change in trend to up.