Traders were in risk-on mode for much of the European session as the fears that have been hanging over markets recently faded a little.
Equity traders are squaring up their positions ahead of the release of the minutes from the latest Federal Reserve meeting.
Fears the US economy might be heading for an actual recession have resurfaced because of the brutal New York Fed manufacturing index report.
The fall in government bond yields has paved the way for a rally in stocks. Lately there has been a strong inverse relationship between yields and equities and that is playing out today.
Worries about inflation are gathering pace as the US producer price index (PPI) rate jumped to 11.3%, close to its record high.
Earlier today EUR/USD traded at parity, it was the first time the currency pair hit that level since 2002.
Equity markets are higher following the well-received US non-farm payrolls report. The update showed that 372,000 jobs were added last month, and that comfortably topped the 250,000 consensus estimate.
Yesterday evening, the Federal Reserve released the minutes from last months meeting.
The bears have emerged now that US traders are back in action following their long weekend because of the Independence Day holiday yesterday.
Last Friday, the S&P 500 rallied over 3% but now things have cooled a little. The slight tick higher in bond yields seems to be applying pressure to stocks.
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