Although the release of the FOMC November meeting minutes weakened the dollar somewhat on Tuesday it was not until a new day was dawning in Asia that investors scrutinized the Fed's assessment and concluded that a disorderly decline in the dollar might have further to run. As the American session gets underway the euro is trying to expand a vault above $1.50 - its first opening excursion north of the key resistance line in about two weeks. While the FOMC pre-empted Chinese and German concerns about the consequences of dollar weakness, the Fed sees the possibility of related bubbles as slim. The price action today leaves the door wide open for a Thanksgiving Day raid on the dollar for the remainder of the week with many American investors closing their books today until Monday.

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The Fed discussed the dollar's loss of value at its November meeting, but noted that not only was it gradual and therefore not creating additional waves typically associated with more volatile asset price movements but that it was also symptomatic of growing risk appetite. To that extent the dollar continues to act as a barometer for the health of the global recovery.

The Fed's upgrade to growth and downgrade to unemployment rates for next year is indeed a welcome tonic, but not one likely to promote dollar strength until investors can stare into the whites of the eyes of a recovering labor market. The minutes partially offset the significance of the importance attached to chairman Bernanke's recent remarks, which amazed reporters given the typical code of silence from the Fed on the dollar's value. By showing a laissez faire attitude in the case of orderly decline the Fed might be ushering in the next wave of dollar losses.

The strength displayed by the euro in early morning trading suggests both a thin market and a strong appetite for euros (and anything BUT the dollar) or both. The first rise above $1.50 in two weeks saw the euro surge to its highest so far in 2009 and its best since August 2008. The stop-loss dollar selling has thus far been contained to $1.5095 and should this appetite continue while North American desks are closed it would be no surprise to see a panic acceleration lifting the euro by a further two or more cents while Americans feast on Thanksgiving Day turkeys.

At ¥87.66 the dollar is close to its weakest price against the Japanese yen since mid-January, which tells us that risk appetite continues to grow. Investors are seemingly growing in confidence that using the dollar to fund riskier trades elsewhere around the world is a strategy that isn't going to come to an artificial end by means of official central bank intervention.

Former Japanese minister of finance, Mr. Sakakibara, whose ability to influence the value of the domestic currency earned him the mantra, Mr. Yen in the 'nineties, almost told CNBC viewers to read between the lines on prospects for the yen. He said that the government might be expected to intervene when the yen strengthens to the dollar at ¥85.00. Enough said.

The dollar is weaker per British pound at $1.6716 so far today and rose from its weakest level in two weeks against the euro. The revised GDP data reported today showed a smaller contraction than was previously reported.

The Aussie and Canadian dollars are both leaping in early trade as risk drives commodity plays higher in light of the weaker dollar. In so doing, earnings prospects at commodity-related companies will circuitously ignite the equity market, which means that everyone will be happy as the dollar slides and the likelihood of intervention in light of the FOMC minutes must remain near zero.

The Aussie is up around a penny at 92.88 U.S. cents after the Reserve Bank's deputy governor, Ric Battellino delivered a rousing speech that helped fuel a fire under expectations for a December interest rate rise next week. He stated, With the economy having only recently entered a new upswing, it is reasonable to assume that we will see this growth extended for a few more years yet. Meanwhile skilled job vacancies rose by 2.4% during November further underlining the buoyant labor market conditions in Australia.

Meanwhile a strong hint from a Russian official that it intends to add the Canadian dollar to its international reserves helped lift it today to buy 95.47 U.S. cents.

Finally, pervasive dollar weakness lifted the Swiss franc through parity for the first time since April 2008. At its weakest moment the dollar bought just Sfr0.9994 according to IB forex data earlier this morning.

Andrew Wilkinson

Senior Market Analyst