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The USD has lost key resistance levels against the EUR, CHF and JPY hitting a 14 year low on the YEN. The Japanese authorities are not happy with current situation with the strength of the YEN hurting exports. Recently we have seen attempts from Japan to verbally intervene in the markets and threaten direct intervention- this has not stopped the rot. Similarly the Swiss National Bank has recently intervened on USD/CHF and EUR/CHF and rumours are circulating that the SNB are buying USD/CHF today. In addition the market is also talking of a potential bout of co-ordinated central bank intervention by the SNB, Bank of Japan, US Federal reserve and the European central Bank.

Whatever is happening we are certainly seeing movement centered on the USD. EUR/USD yesterday broke through 1.5050 a key level and this could open the way to 1.55; USD/CHF is hitting parity and USD/JPY at 14 year lows are worrying signs of a USD in disarray. Also against the AUD, NZD, ZAR and CAD the USD has seen pronounced weakness lately as the market moves out of USD into higher yielding assets. The continued global recovery is driving this momentum- we have seen equities move higher and Gold touching $1200 which exemplifies this. In addition the USD is being hit by continued diversification by China and Russia amongst others out of USD as a reserve and into other currencies such as the EUR & CAD. Expect the wrangling over the current USD weakness to continue and intensify if the trend continues.  Intervention may be a strong tactic but there are certainly alot of unhappy economies with the recent USD weakness.

The pound seems to be one of the few currencies losing against the USD and we have seen the pound fall against the USD, JPY and the EUR. There is a nervous feel about the markets today contributing to sterling weakness and we have seen the FTSE fall 1.8% already this morning. Dubai is requesting a re-structuring of their debt which has shook the credit markets- this could be contributing to the jitters. The pound may also be falling from the hangover of recent dovish comments by Mervyn King coupled with the risk aversion in the markets. Since 7 a.m Sterling lost nearly 2 cents against the USD, nearly a cent on the EUR and 300 pips on the JPY.

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