Over the last few trading sessions the low yielding Yen has rallied against the USD as falling stock markets and ongoing concerns over the health of major financial institutions have forced investors to cut back on the risky 'carry trades' and the markets high yielding currencies have succumbed to more selling pressure. Overall there is still a Negative bias towards the USD but for now the FX market seems content to take profit on extended short dollar positions whilst the clouds of uncertainty overhang money markets. Sterling remains under pressure following a disappointing October retail sales number yesterday and speculation that a weaker economic outlook may prompt the B of E to cut rates at least twice early next year. Focus will still be very much on the performance of Wall Street once again as it fast takes on the role of the markets 'confidence indicator'.
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