US Dollar Ignore Fed Warnings

Previous session overview
US Dollar Ignore Fed Warnings. The US dollar remained almost exactly unchanged against major forex counterparts.

EUR/JPY falling as Europe players reacts on negative Asian stock price movements. Last at 163.10, support tipped at 162.50. EUR/USD also falling for same reason, last at 1.4406; may fall to 1.4370. (SWFX).

Australian Dollar Ends Stronger As Equity Markets  Stabilize.

The euro is little changed and dealers bank on hardly any movement for now. Narrow ranges are likely, while the market waits for the German IFO data later today to assess economic conditions.

On Tuesday, the dollar rose against the yen as stronger U.S. stock markets convinced some currency investors to take on more risk by selling Japan's low-yielding currency and buying higher yielders. Dealers saying that dollar's direction for the rest of the year is fluid.

USD/JPY still likely to rise above Y114 this week. Lots of players still short USD, but with no scheduled events.

German Nov PPI +0.8% MM, +2.5% YY.

Market expectation
Today most important events are ECB President Jean-Claude Trichet speech and IFO business sentiment in Germany.  Wednesday sees the release of the German IFO survey (Forecast: 104; Prior: 104.2) whilst President Trichet will be talking before an EU economic committee. 

GBP - Looking ahead, the BoE minutes will cause plenty of attention in the UK markets on Wednesday, as traders try to delve into any further indication of monetary policy. 

The main focus will continue to be if the recent dollar rally is sustainable, or if this move is just a hiccup in the greenback's decent.  We are sure to get more clues as economic events unfold over the next few weeks.