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The rough ride for equities last week appears to have run its course for the time being, as global sentiment has found a foothold this morning and is leading stocks higher as the new trading week gets underway. The lift in risk appetite is in part due to the market’s positive reaction to the bailout plan announced on Sunday for Portugal’s Banco Espirito Santo, the €4.9bn rescue that will see the restructuring of the bank’s assets into both a “good” and “bad” bank.

Unlike the most recent bailout situation in Cyprus, depositors and senior bondholders will be spared from any losses, with the recapitalization coming from the Resolution Fund that was created in 2012 and financed by regional banks. The move to cauterize any potential contagion from the fallout of BES has seen a bid tone emulate throughout the more senior regional fixed income market, with the 10-year Portuguese government bond in the green today. The Euro has been confined to a tight range during early morning action, pivoting close to unchanged just north of the 1.3400 mark against the USD heading into the North American open.

Turning our attention to overnight action in Asian markets, Chinese media has reported that the People’s Bank of China has extended a loan to a state development bank in the amount of 1tn Yuan ($162bn), which will be aimed at lowering financing costs for government-back housing projects. The loan represents another form of targeted monetary policy easing from the central bank, which is curious considering the rhetoric from leadership about how credit expansion needs to be controlled in an effort to put the economy on a more sustainable growth trajectory.

What appears to be a subsidized lending facility has also helped bolster investor sentiment, with the Shanghai Comp leading Asian equity indices with a gain of 1.74%. Much like the Euro, the Japanese Yen has also seen some muted trading conditions to begin the week, with the pause in the rally of the USD from Friday leaving currency markets searching for direction as USDJPY chops in the mid-102s.

Heading into the North American session, while select Canadian provinces are observing a civic holiday, S&P futures are showing green on their screen ahead of the opening bell as risk appetite rebounds somewhat. Hydrocarbons are trading with some weight to their tape as front-month WTI remains heavy under $98/barrel, and the international Brent is finding willing sellers south of $105/barrel. After a roller-coaster of American focused data last week, the economic calendar takes a bit of a breather to begin the week. The latter half of the week will be characterized by central bank meetings from the ECB and BoE, but for US economic data, trade balance numbers on Wednesday will be the main highlight. The Loonie is slightly softer today, but like most majors is seeing subdued price action while participants continue to digest the Non-Farm Payrolls report from last Friday.

While the previous week was about US-data navigating the USDCAD pair, Loonie traders will now turn their attention to a bout of domestic data in order to dictate price action, with Trade Balance (Wednesday), Ivey PMI (Thursday), and the Employment Change (Friday) all dropping this week. As a brightening of the economic situation south of the 49th parallel has accelerated the reversal in USDCAD recently, Loonie bulls will be hoping for an equal improvement in economic activity domestically to try and stanch some of the bleeding. While more robust export growth and a decent employment report would help the Loonie combat some of the recent USD strength, continued mediocre economic indicators would likely exacerbate the squeeze on the longs and fuel further upward momentum in USDCAD.