A lively night with both Fed Chairman Bernanke and ECB President spouting forth and, just so they didn't feel left out, Bush and Paulson also got in on the act.
There was the re-iteration from Bernanake that the US could start to see the benefits of an economic turn-around suggesting that interest rates were at their lows. Bush and Paulson then emphasised that a stronger dollar was definitely on their wish list and Paulson did not rule out concerted intervention from the G7 to support the greenback.
It will be the fear of actual intervention rather than the rhetoric that will force traders to liquidate short Dollar/long Euro positions enough to change the trend but between them the US camp has done a decent enough job in the past 24 hours to rattle a few cages.
Tichet meanwhile confirmed his comments from last Thursday when he said there may be a small rise in interest rates in July but added nothing more, obviously aware that his comments put paid to the previous rally in the Dollar until he opened his, normally more cautious, mouth last week.
The end result has been that, in extremely volatile trading, the Dollar has strengthend to 1.5565 from 1.5820 versus the Euro and to 1.9598 from 1.9745 against the Pound.
EUR/GBP, having eased off all day from 0.8034 ( 1.2447) yesterday morning had a swift move down below 0.7900 ( 1.2658 ) last night as EUR/USD got trashed and we had slightly better than expected retail sales data from the BRC monitor but then equally as quickly bounced back to 0.7945 (1.2586 ) as the Pound played catch up in the general bid to buy Dollars. The RICS house survey data for the UK offered no new surprises away from expectations.
The BOE Governor Mervyn King today gave a speech on the UK financial structure but deliberately steered away from adding to the debate on interest rates.
The Bank of Canada have just annnounced they are leaving theirs at 3% and this has seen a sharp rally in the CAD down to 1.9944 from 2.0185 earlier this morning.
Everything still to play for this week and we can expect more chaos and mayhem as the days unfold. On Thursday the Irish get a chance to vote in a referendum on the European Union's Lisbon Treaty. In 2005, French and Dutch voters said 'no', sparking off sharp Euro falls. Will we see something similar this time.........??
Mike Paterson is a former senior interbank trader with UBS and Credit Suisse and has been involved in the FX market for over 28 years. He now runs his own consultancy advising private and corporate clients on best execution of currency requirements trading through a small number of preferred rate providers.
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