Dollar in sharply lower today on the back of strength in stocks and crude oil. Following broad based rally in European equities, US stocks open higher with DOW soaring to new 2009 high and is set to take out 10,000 psychological level. On the other hand, crude oil also breaks through 73.16 near term support which, technically, indicate that recent consolidation might have completed. Canadian dollar is so far the bigger winner today with support from the strength in oil. Dollar reverses earlier gains and dips through 76 level and could be heading to test 75.78 low.
Developments in stocks suggests that DOW's rally is still in progress for 50% retracement of 14198 to 6467 at 10334 before completion. Also, crude oil will likely made another high above 75.0 before reversal. The developments argues that the greenback will remain pressured in near term. Today's intraday reversal in dollar index dampens the view that it's bottoming and another low below 75.78 would likely be seen in near term.
Sterling, on the other hand, remains the worst performer. The Center for Economics and Business Research said U.K. interest rates will stay at a record low until at least 2011. The CEBR also said that BoE might expand the asset purchase campaign by another GBP 75b. Sterling is particular weak against commodity currencies. GBP/CAD's down trend is still in progress and is set to extend further to 100% projection of 2.0725 to 1.6721 from 1.9300 at 1.5296.