The USD has come under heavy selling pressure across the board, as anxiety surrounding Greece temporarily decreased and latest FOMC policy decision was widely viewed less hawkish than the market was expecting. After two days in Brussels, the main points to come out was from EU's Rehn, who stated that the Eurogroup had sketch out an aid strategy to Greece. However, since Greek Finance Minister Papaconstantinou had not asked for a bailout, no details of the plan would be devolved. Seems to us further use of verbal parlor tricks to conceal the fact the EU will eventually do nothing. Slightly more concrete and positive for the EUR was the S&P announcement that affirmed Greece's BBB+ credit rating and removed it from Credit Watch Negative, although Greece still retains its negative outlook. This is surprising to us, since the rating agency just downgraded Greece only a few weeks ago and we remain skeptical of the recent EUR rally. In, Asia the BoJ voted unanimously to keep its policy rate unchanged at 0.1% but in a 5-2 vote, doubling the short term fixed-rate lending facility to Y20 tn. The move had been widely publicized and the JPY gained slightly as the market had expected a more aggressive form of QE. In the UK, the BoE MPC minutes are due today and markets expect a unanimous vote to hold monetary policy unchanged. There has been a growing call for further quantitative easing from several members and we expect that additional £25bn asset purchases remains in place. However, the timing of the increase will be variable, based heavily on CPI coming down.
Forex-Chart