The US dollar is giving back some ground on most fronts as risk trades improve. The lone exception is USD/JPY, which also benefits from positive sentiment.

The S&P 500 is now basically flat on the day, recouping a 45 point loss. It's an impressive show of strength from the equity bulls even though yields are up 17 bps at the front end today and the odds of a 75 bps hike have jumped.

The bulls might argue that jobs are a lagging indicator and that the household survey is much softer than establishment data. Next Wednesday's CPI numbers are more important for the Fed and it's still a long wait until the September 21 FOMC decision.

AUD/USD is a good demonstration of the price action as the pair recovers about 40 pips from the lows.

AUDUSD 10 mins