Some risk sentiment has returned. USD gets beaten again!

Dollar performance was mixed again during the New York session as some risk sentiment came back. The treasury department announced it would unwind its remaining $142bn of agency – guaranteed mortgage-backed securities which caused treasury yields and dollar strength. These moves retraced back down as worse than expected home sales data came out of the U.S.

ECB President Trichet reinforced the pre-existing message that “strong vigilance” is needed on inflation.

Yen was capped yesterday as more stable risk sentiment and high probability of G7 intervention are limiting the demand for the currency. Moody’s said the downside risks from Japan’s disasters have increased.

Today we have the UK CPI which could bring some movement in GBP. Considering that risk sentiment has come back and another ECB hawkish statement, I’d look into buying into dips on the Euro, USDJPY and Sterling. Aussie seems to be trotting away higher as well the strongest.

This morning has been fairly quiet with some USDJPY movement downwards to below 81.00 levels.

Data Today

UK CPI – 9.30am GMT

UK Public Finances – 9.30am GMT

US house price index – 2pm GMT

Happy Trading!

FxTaurian