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Dollar's sell off continues as global markets respond to Fed's historical rate cuts to bring the federal funds rate down from 1.00% to a target range of 0-0.25% and will keep rates at this "exceptionally low levels" for some time to come. In a rather lengthy paragraph, Fed explained the quantitative easing measure that it will adopt including "a number of open market operations and other means that sustain the size of the Federal Reserve's balance sheet at a high level." In addition to purchasing large quantities of agency debt and mortgage-backed securities, Fed will also consider the potential benefits of purchasing longer-term Treasuries. While it's perceived that Fed has formally announced that it's going into quantitative easing, it's believed that it's different from what the Japanese did. The US style is focused on the assets side while the Japanese style is focused on the debt side.
Technically, dollar index dived through mentioned target of 50% retracement of 71.31 to 88.46 at 79.88 and breached 80 psychological level briefly. It's also now inside medium term support zone of 75.89 and 80.38 and hence, some support will likely be seen in near term. A break of 81.78 minor resistance will be the first sign of stabilization. Euro, on the other hand, remains generally firm and reached new record high in EUR/GBP at 0.9047. Though, the common currency is retreating in EUR/AUD and EUR/CAD crosses as commodity currencies are catching up with the rally against dollar.
Released today, Japanese Leading indicator is finalized at 85.2 in Oct. Germany HICP is finalized at 1.4% yoy in Nov. Eurozone HICP is expected to be finalized at 2.1% yoy in Nov. UK events will dominate the calendar today with MPC minutes and employment data featured. US current account and Canadian Wholesale sales will also be featured.
Overnight Asia/Europe• USD firmer overnight• Stops seen in most pairs lifted USD• Liquidation of...
The euro fell against the dollar before data that will probably show slowing regional...
Previous session overviewOn Monday, the dollar posted steep gains against the euro, the yen and the Swiss franc amid optimism that a broad-based U.S. economic stimulus plan will...
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