Recent inter-market correlations continued to play out and the equity market's gain was once again the US dollar's pain. Stock markets in the US jumped more than 1.3% in broad terms as St. Louis Fed President Bullard's comments of an easier Fed for longer couple with positive housing data continued to permeate the marketplace. Bullard overnight called for an extension to the Fed's MBS purchase program beyond 1Q 2010 and his rhetoric suggests a Fed that will remain accommodative as far as the eye can see. Economic data was also positive for risky assets.

US existing home sales jumped more than 10% in October to an annual rate of 6.1 million units. Traders should take this upbeat news with a grain of salt as it likely reflects a jump in sales ahead of the November 30th expiry of the first-time homebuyer tax credit (which has only recently been extended through the middle of 2010). That we will get a sharp correction in sales into the end of the year is extremely likely. Nonetheless, the flight to risk saw the dollar fall about -0.6% on the day against major currencies.

The NY session, however, was more about consolidation than anything. EUR/USD chopped between a 1.5000 high and a 1.4955 low on the way towards a close near the 1.4970 area. Cable meanwhile ranged between 1.6585 and 1.6645 before going out just above the 1.6600 short-term pivot. USD/JPY tried to extend gains but stalled above the 89.00 level once again. There was a strong 2-year Treasury note auction that kept yields under pressure, thus eliminating one of the catalysts for the pair.

The upcoming Asia session now kicks off with the Australian index of leading economic indicators. While there is no consensus to speak of, an improvement from the 1.8% read in August should elicit some upside in Aussie. The 0.9270 area is important resistance as this is where an hourly down-trendline and the 200-day sma currently lurk †above opens to 0.9330 next.