The US dollar is currently off its lows but remains under pressure as markets continue to worry about widening damage to financial firms from the credit crisis. Rumours abound in the US about troubles at Leman Brothers and talk that Morgan Stanley could see its $11 billion plus credit line backing its commercial paper program shrink under $5 billion as banks continue to be cautious about extending credit.
The Yen remains wanted as Japanese exporters and institutional investors repatriate overseas earnings and investments before Japan's fiscal year end on Monday.
Severa Fed members spoke yesterday and they were all downbeat about the future of the US economy and despite the Fed having pumped hundreds of billions of dollars of liquidity into markets further rate cuts are expected.
Difficult trading out there but we retain a USD negative bias with prudence!