The USD is lower to start New York this morning as traders and investors await the details of the US bailout of the banking industry; confidence is lower in the Greenback today due to the underlying weakness in the financial sector that the bailout won’t necessarily address. Focus is high on where equities will trade as other financial markets around the world implement a “no short sale” rule of some kind. Oil prices are sharply higher above the $106.00/BBL level and regardless of recent bearish sentiment and optimism that the oil crisis is correcting the bull is very much alive. The Yen is again the strongest currency on the board rising against most major pairs; USD/JPY traded for a low print at 105.94 before bouncing back to the 106.40 area. Traders note sell orders active at the 107.00/10 area from Japanese lifers and exporters overnight, analysts suggest that the rally back from the 103.00 handle has completed at the 108.00 area last week and more potential downside is possible; perhaps grudgingly admitting that the USD is not in the bull mode. Cable has rallied along with EURO extending to the upside for a high print at 1.8478 putting 10 big figures in off the lows from only two weeks ago; traders note stops above the weekly high triggered. EURO high prints at 1.4627 also saw stops above the 1.4600 area; traders note semi-official demand off the Asian lows overnight. Rhetoric from the BBK and ECB officials are leaning to a firm interest rate picture near term leading to underlying support for the EURO so far to start the week. Both EURO and GBP are tracking each other closely as has been the custom the last several weeks suggesting that the move is correlated to a weaker USD and not to individual bullish sentiment from either rate; traders note that order books have thickened up over the weekend suggesting more risk-aversion and speculation will play out this week—possibly from the potential sale of Lehman to a Korean investor. In my view, the USD is becoming less attractive until the issue of the US bailout is secure in the minds of traders. Once things settle down moving forward the underlying stress on the US economy and high energy pricing will likely bring bearish pressure to the forefront. Look for technical trade to continue today and the USD to end lower.

Analysis Provided by: Forexpros.com - Written by Jason Van Jankovsky