The moderate dollar strength we saw last week came to an end today as the US FOMC's Bullard gave the market a scare by commenting that the Fed should extend its current Quantitative Easing program of buying MBS past the March 2010 expiration date. Bullard was quoted as stating, ''I have advocated keeping the asset purchase program open but at a very low level, and wait and see what happens, and as information comes in about the economy we can adjust that program while the federal funds rate remains at zero.'' The news was digested as dollar negative, and the market reacted likewise in thinned conditions due to a Japanese holiday and a lack of any meaningful data.
EUR/USD primarily headed in one direction for the day, and that was higher as it moved from 1.4855 to levels near 1.4950. GBP/USD moved from near 1.6480 to 1.6545 levels, USD/CAD slid from 1.0705 to 1.0630, and USD/CHF dropped from 1.0180 to 1.0115 to cap off the moves of the day.
Gold was the big story of the day as it broke through subsequent new record highs on the day to finally post an $1164.70 per ounce record. Many traders spoke of a $1175.00 option strike that expires later today as a spark for the moves. AUD/USD benefitted from the gold rush, moving over 70 pips on the session to highs just shy of 0.9210. NZD/USD also reached 0.7285 after a start near 0.7220.
Although most yen crosses made handsome moves higher with the dollar and yen weakness, USD/JPY was stagnate once again on the day, trading tightly on the day between 88.80 and 89.05.
Although the week is a short one due to the US holiday, there is a lot of data packed into the next few days including, existing home sales, Preliminary GDP, CB consumer confidence, FOMC minutes, durable goods, unemployment claims and finally new home sales.....
