USD

The market is once again quiet and somewhat directionless.  The USDJPY has fallen under the pressure of lack of any more upside momentum.  This morning there was a large bid at the 103.55 level which may attract some aftenoon demand

About a half hour before the London session gets started, the USD is making moves across the board.  The USD is falling off session highs as yesterday former Treasury Secretary Snow indicated that the US is not in a recession. He followed with his belief that the US may be near the end of rate cuts. 

In addition, the FED's Hoenig indicates that high inflation may even cause rates to rise in the future.

The USD made some session highs vs. its counters a while ago as the London session gets under way. 

Despite better than expected ISM data, the USD has continued to drop vs. its counters as the Asian shift rolls on.  Today, FED Chairman Bernanke said "home prices declines could affect the real economy and markets".  He followed, "Foreclosures are likely to rise in 08 vs. 07". 

With the low liquidity in the Forex market due to UK's May Day and Japan's Golden Week, the majors have been consolidating as the London session gets rolling.  Upon the market open, the USD did lose some ground in this thinly traded market after making some progress Friday.  The New York session could pick things up as the ISM Non-Manufacturing Composite is released at 10:00 AM. 

The USD falls to session lows vs. the AUD, EUR, and CHF.  This comes off Friday's favorable job data, where the USD was able to make some solid gains.

Yesterday, as the FED made their 25 bps cut as forecast, the USD took a nosedive due to the lack of a clear message on their part.  This put a quick stop to the potential USD rally as the data was coming up all USD.  There had been stronger than expected US data and weaker than expected European inflation figures prior to the cut.  However, uncertainty in a signal on the FED's part was able to pause a much needed, potential USD rally.  (CONTINUED)

USD/CHF leading USD strength here. USD/JPY may follow if USD/CHF can catch a bid above the 60 level which may see USD/JPY play catch up, and perhaps even take out the 105.00 level which has eluded the pair for the past few sessions.

Following weaker than expected German Unemployment data, the USD is making a rally (especially vs. the EUR).

The USD made and increased its gains overnight on speculation that the FED, after next weeks meeting, will begin to cease cutting interest rates.  Assisting in these moves overnight was weak EUR Business Ifo numbers, showing poor confidence levels not seen since 2001 in the EUROZONE.  The FED meets next week and the forecast is for another quarter of a point cut.  Today's major data (Core Durable Goods Orders and New Home Sales) will help finish painting this picture leading into next weeks FED meeting.