It has been a choppy overnight session, but the net result is that the USD is looking relatively bid (compared to recent standards). A brief surge for higher risk pairs following the release of the latest RBA minutes overnight has proved very short lived – they reiterated their hawkish stance and put the focus on the CPI data on the 27th October by stating that they will act if “risks materialize” and cited the strong AUD as a factor for keeping inflation within the band – with all of the …

Currency markets remained volatile overnight after the fundamental release of the FOMC minutes. After coming under some downward pressure on a covering of short dollar positions ahead of the release of the minutes of the September FOMC meeting, the euro appears to have resumed its upward trend versus the dollar. Dovish in tone, the FOMC minutes seemed to indicate that the Fed is moving closer to introducing a second round of quantitative easing (QE), with some speculating that it could come as soon as the next meeting in early …

Market Update
The Dollar was the worst performing currency again last week, with the EUR/USD briefly reaching above 1.40 and AUD/USD breaking above its 2008 high of 0.985. Ongoing expectations that the Federal Reserve will increase quantitive easing in November conitnue to weigh on the Dollar. The long term valuation model from Goldman Sachs suggests that the US Dollar is expected to see further weakness short term, and may test the last previous major low – the 2008 low which is currently $5 from the current price level.
The Pound continues …

An already weak US dollar took another hit early Friday morning following the latest report on jobs. According to new Labor Department numbers, 95,000 workers were cut by US employers during the month of September.

Forex markets remained unchanged overnight as markets digested volatile price action from the last 48 hours. The Euro saw fresh yearly highs after touching $1.3839 versus the USD in late trade yesterday and remains firm against a number of its counterparts. The US Dollar however remains very much bearish against the majors however technical indicators may signal a possible reversal in trend as speculators look to take profit from the key psychological levels currently being tested. Broader price action overnight seems corrective more than anything else and we have seen …

The euro, pound and yen are among major currencies that have taken advantage of a weaker dollar again this week. The dollar, already sluggish in lieu of ongoing unemployment concerns, slid further following the Fed’s announcement last week that it plans to buy US Treasuries to effectively infuse cash into the economy.

Price action yesterday was dominated by negative comments from the Bank of England’s Posen, who gave a rather gloomy outlook on the UK economy. He couldn’t have been more dovish, citing the view that the BoE could buy private assets if purchases of gilts did not have the required effect. With inflation running at elevated levels this could not be worse for the currency. Whilst GBP and Usd are in a similar boat, EUR is not, and so EUR/GBP is the vehicle to express this bearish GBP …