Wednesday 12th March

The US dollar registered record lows against the Euro ($1.5495) and many other currencies early yesterday but then was subject to a sharp reversal as the US Federal Reserve and 4 other central banks coordinated to make available hundreds of billions of dollars in fresh funds to cash starved credit markets.

Stocks surged, bonds fell and the long suffering US dollar soared in reaction to the new initiatives as markets read the move as a step in the right direction. The moves do not take away the credit crunch because deleveraging will still have to take place but it will allow this to be a more orderly process.

Despite these moves the overall offered tone to the USD remains and yesterday BUBA president Weber warned that German inflation is a cause for concern and thus further reduced expectations for ECB rate cuts. Let's see if there is further reaction to these Fed measures. T/R's rule.