The dollar gained considerable strength in early trading and since began to stabilize against the majors. The EurUsd collapsed nearly 300pips to the low range of 1.36, while the UsdJpy jumped roughly 140pips to the low 93 price area. The GbpUsd built light momentum to the high 1.46 level, up 130 pips in today’s session. Equity markets closed higher in Europe, but experienced losses in the US. The SMI in particular added 4% or 221pts, while the Dow fell .91% or 81pts. Bond yields remain extremely compressed, we saw the beginning of a selling trend in the 10yr UST, but rates are still far from normalized levels at 2.48%. Commodities were mixed with a 5% gain in crude oil brining the price to $48bbl, while gold gave up 2.4% at %857oz.

The ECB released commentary expressing their concern over inflationary risks, but emphasized the significance of stabilizing the financial crisis. There appears to be a disconnect between member of the ECB , as recent statements seem to giving investors mixed signals regarding their intentions. Eurozone Q3 GDP growth is scheduled to be released on Thursday, and projections are pointing to a negative reading. The market has already begun to price in further weakness in the region, as the pair fell sharply from start of the trading day. All of this followed the announcement of the fiscal portion of President Elect Obama’s Stimulus Plan. The dollar was able to build momentum on optimism that the tax cuts will be received well by both democrats and republicans in congress, and ultimately spark growth through consumer and commercial spending.

ACM Forex
Advanced Currency Markets