On the eve of the U.S. Presidential election, the Dollar posted large gains of 150 points to close at 1.2580… … against the EUR, helping to erase some of its losses from late last week.

The Dollar continued to shrug off poor economic data stemming from the U.S. economy
as the Institute for Supply Management released the Manufacturing Purchasing Manager
survey. The survey came in below the forecasted value, displaying an overly
pessimistic view of the U.S. manufacturing industry. This was one of the worst
outlooks in the survey's history, adding more evidence of a recession in the U.S.
economy.

U.S. equities were little changed in light trading due to the uncertainty of the
U.S. economic situation and the decision of who the next U.S. President will be.
Some analysts forecast a rise in the stock market directly following the election as
it has historically provided some market confidence and relief for anxious
investors.

In early trading this morning, the AUD/USD fell sharply. The Reserve Bank of
Australia surprised the market today as the bank cut Interest Rates by 0.75% to
5.25%. This was a greater than forecasted rate cut by another quarter of a point.
The move came as a shock to traders as the Australian economy has not shown the same
amount of weakness as the U.S. economy.

* EUR
Euro-Zone Forecasts Depreciating EUR in Light of Upcoming Rate Cuts
According to the autumn report from the European Commission, the European economy is
not in good shape. The EU current account deficit is forecasted to be near 1%. The
current account deficit may also be significantly higher in the smaller Eastern
European economies.

As exports fall, the European current account deficit will rise. This will in turn
lower the value of the EUR against the Dollar. The most effective adjustment to the
current account deficit occurs with a devaluation of the currency to reduce the
price of exports. This may help close the gap in the current account deficit in a
slumping economy. This also may have an effect on the EUR in the long-term, perhaps
keeping the EUR at its current trading level near 1.2600 against the USD.

Traders are looking towards Thursday when the European Central Bank (ECB) and Bank
of England (BoE) are forecasted to cut Interest Rates further. These rate cuts
appear to have already been priced into the currency, but may still move the market
if a larger then expected rate cut is executed. The ECB may go this route if it
forecasts a prolonged recession in the Euro-Zone economy. Traders should look to see
a depreciating EUR in the next few days as these factors are evaluated by investors
and factored into the market.

* JPY
Japanese Interest Rate Cut Not Enough to Fix Economic Slowdown
Japanese markets were closed yesterday, decreasing the already fragile liquidity in
the currency markets. The JPY traded up against the Dollar, gaining a measly 33
points to close at 98.76.

The Japanese government has employed tools from both its fiscal and monetary policy
to fight the financial crisis and global economic slowdown, but many critics have
their doubts as to the effectiveness of these programs.

As markets wait for Interest Rate cuts in Europe, England, and Australia; Japan
lowered Interest Rates last week in order to jump start the economy. A cut in rates
of 0.2% was implemented to stimulate lending, but some view this as symbolic move
with little chance for a significant economic impact due to the already low Japanese
Interest Rate.

The economic stimulus package that was announced last week may also have a limited
effect on the Japanese economy. Japanese consumers are prone to save rather than
spend, further limiting GDP growth. These programs may fail to stimulate the
economy, sending the JPY lower against the Dollar.

* Oil
Oil Prices Drop from Negative Economic Outlook
The price of Oil continues to fall, shedding over $5 in trading yesterday to close
at $63.24. Oil suffered a sharp drop in price during the month of October and has
halved its price from its record peak in July.

Oil has been steadily dropping due to a global economic slowdown. Any hint of
negative economic data has sent the price lower. Yesterday saw the release of worse
than expected numbers for the U.S. manufacturing industry. This added to the
negative pressures on Crude Oil prices, sending it lower late in the day.

The Crude market has also been waiting for signals from Saudi Arabia that it has cut
Crude Oil production in line with the recommended cuts from the Organization of
Petroleum Exporting Countries (OPEC). OPEC would like to see Crude Oil hold between
the ranges of $70-$90 a barrel, but a negative outlook on the global economy may put
pressure for Crude to perhaps trade in a range closer to the $40-$60.

Technical News
* EUR/USD
This pair is still in the midst of a steady downtrend, however the 4-hour and the
daily chart's RSI has peaked at the over-sold zone, suggesting that a bullish
correction move might be quite imminent. As for the short term, a sharp bullish move
has already taken place on the hourly chart and seems to have more steam in it.
Going long with tight stops might be the right strategy for the nearest timeframe.

* GBP/USD
After the recent intensive downtrend, the cable appears to be consolidating at the
1.5650 level. In the shorter time frame a bullish cross on the 4-hour indicates that
there might be a small correction before the larger bearish move resumes. Selling on
highs appears to be preferable today.

* USD/JPY
The pair has been range-trading for a while now with no specific direction. The
4-hour chart's Slow Stochastic is providing us with mixed signals. All oscillators
on the 4-hour chart do not provide a clear direction either. Waiting for a clearer
sign on the hourlies might be a good strategy today.

* USD/CHF
The volatile trading continues without a distinct breaking direction. The hourly
chart is giving mixed signals and is mostly floating in neutral territory. The
dailies however, are showing a slight bullish momentum. The daily chart's Slow
Stochastic is positively sloped and the RSI also confirms that the direction is
indeed up.

The Wild Card
* Gold
This commodity has been trying to massively correct the intensive bearish move, and
is now trading around the 10 level. The sharp bullish channel is in a high spot at
the moment and together with a positive slope of the hourly chart's Slow Stochastic
it provides
forex investors quite a good potential for long positions.

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