Dollar Heavy

The US dollar is broadly weaker as the week draws to a close. The feature during Asian hours was speculation of BOJ intervention and rumors that the governor of the BOJ was going to resign. The dollar rallied to JPY85.40 before returning to the JPY84.20 area, new marginal lows since last week’s intervention.

The feature Europe was the unexpected increase in the German IFO survey. This spurred a euro recovery back to yesterday’s highs (~$1.3415) after stops were triggered on the break of $1.33 in Asia. That the euro’s uptrend is intact despite the heightened anxiety over the debt situation Portugal and Ireland remains a notable feature, suggesting that the possibility (likelihood?) of additional action by the Federal Reserve is trumping the European debt story. Although the short-term momentum indicators are overstretched for the dollar, bounces are likely to be shallow.

The dollar is set to make a new record low against the Swiss franc today in the US. The prior was CHF0.9786 around the time of the Bear Stearns demise in March 2008.