Today’s US Dollar Trading

• USD takes another plunge on Fed action and liquidity fears

• Equities have violent day, end positive

• Lots of jawboning for a better USD

Overnight Preview

• Expect volatility and more rhetoric

• Traders expect the majors to pullback soon to correct

Looking Ahead

• Fed has FOMC meeting starting tomorrow, traders expect 75 BP cut

• 7:30 AM CDT Housing Starts and PPI forecast 995K and +0.3%, core +0.2%


The USD got slammed again overnight trading to some of the worst levels in history against some pairs. The US Fed added liquidity and so did the BOE and traders fear the worst is yet to come in the liquidity crisis now panicking Wall Street. JP Morgan agreed to buy Bear Stearns today for $2.00 a share which amounts t around five cents on the dollar leaving investors furious; it’s only a matter of time before the lawsuits, Federal Probes and fines start happening. Traders note that the Greenback was sold heavily on high volumes during the overnight sessions but has stabilized during the New York sessions leaving some to suggest that the majors are going to take a breather for a short time; other desks report that their order books are wiped clean expect for stops on winning positions and the major pairs are less than tradable at this point. Apparently the market needs a correction of some kind or a word from someone who has the credibility to support the crisis and stabilize the USD. The only exception to the USD crash was the GBP; cable broke sharply along with the USD today. Making an early high at the 2.0231 number the rate started to sink on cross-rate liquidation breaking over 700 points against the yen and trading to a 1.9990 low for USD; traders note that the rate has closed below the 100 bar MA again making for a technical reversal. Aggressive traders can ADD to open shorts for additional weakness into the next level of support around the 1.9750 area. EURO rallied to an overnight high at 1.5905 before reversing but holding the overnight opening range at 1.5675 area. Forex Traders note that the rate is technically ready to advance again to the 1.5950 area but the large wick and head scratching suggest that the rally was used by longs to get out. USD/JPY and Swissy too both traded to significant lows; but both pairs have signs of reversals beginning. Low prints in USD/JPY at 95.76 were bought hard and the rate rallied to 97.70 area into the close; Swissy same story rallying off .9640 lifetime low back to the .9870 area into the close. Potential reversal in the works I think. Look for a Fed cut to be factored in.