The New York session saw the dollar take a few more body blows today.  The dollar seems as if it can not find any love anywhere.  Overnight we saw EURUSD make a new all time high.  New York didn't want to feel left out so they trumped the Europeans by taking EURUSD even higher.  New York took the pair from the 1.4770 area up to the 1.4820/25 area. GBPUSD saw a move from the 2.0590 area all the way to the 2.0675/80 area. USDJPY started the session up near the 110.50 area but succumbed to pressure and made a move down to the 109.50/55 area. The dollar has managed to make back some of its losses going into the end of day but the gains have been very limited.  The dollar's weakness can be attributed to a number of factors.  The first is the ongoing credit concerns out of the U.S.  The market is thinking that the only thing that can help credit markets for now is lower U.S. interest rates.  The second factor adding to the dollar's woes was the release of the FOMC's Minutes of their October 31st meeting.  The members stated that the rate cut in October was a close call. However, they also stated that downside risks for future growth were somewhat outweighing inflation risks.  If this should turn out to be the case we could see the Fed cut the Fed Funds rate further. One major U.S. bank did indeed revise their forecast for Fed Funds.  They now expect the Fed to cut 3 times before the end of Q1 2008 and bring the Fed Funds rate down to the 3.75%.  Lower interest rates will not provide any support for the greenback.

We have a few data releases out of the U.S. tomorrow that could get the markets moving but with the Thanksgiving holiday right around the corner we would expect reactions to be muted. Unless this data comes out way off of expectations we should not see markets react much.  However, traders do need to stay focused on more bad news from the credit markets and they will also need to keep an ear open for more bad news from major U.S. financial firms. Continued bad news from these arenas will keep the markets volatile.

Upcoming Economic Data Releases

  • 23:00 GMT Australian conference Board Leading Index for Sept.; No survey, Prior +0.7% (relevance:medium)
  • 23:50 GMT Japanese Merchandise Trade Balance for Oct.; Expect JPY1052.8B vs. prior JPY1635.9B (relevance: medium)
  • 23:50 GMT Japanese Adjusted Merchandise Trade Balance for Oct.; Expect JPY1056.7B vs. prior JPY1034.3B (relevance: medium)
  • 23:50 GMT Japanese All Industry Activity Index for Sept.; Expect -1.5% vs. prior +1.0% (relevance: high)
  • 00:30 GMT Australian New Motor Vehicle Sales (MoM) for Oct.; Expectations +3.5% vs. prior +1.8% (relevance: medium)