The dollar was better bid in NY trading as the commodity complex continued to come off the boil. Gold (XAU/USD) sank like a stone from around $1153 towards $1125 in what felt like one fell swoop. Apparently there were a ton of stops through the $1145 zone and the market was resigned to gun for most of them. On the very short-term charts, the precious metal now looks to be forming a bear flag and this suggests that the sharp decline in NY could be only the beginning. While we remain fundamentally bullish on gold for 2010, keep in mind that the short-term wiggles can be quick and violent.

There was plenty of Euro buying interest ahead of the 11am ET fix, but this would later fade and the EUR/USD session highs near 1.4545 would not be seen again. In the end the pair closed near where it opened for NY trading. Meanwhile, the so-called commodity currencies melted on the back of the selloff in hard assets. USD/CAD added a nice +70 pips from the session open, but is now finding a good amount of selling interest in the 1.04 realm. AUD/USD for its part saw a nice squeeze lower towards 0.9190 after making a run for the 0.9270 zone early in the session. The pair continues to find two-way interest by 0.9200 now.