The Dollar rose sharply higher vs the Euro in overnight trading, and rallied against the Yen and Pound and others as well. The Euro continues to be pressured by credit concerns as a speech by the Greek Prime Minister George Papandreou did not calm fears about how the country would work its way to reduce deficits and pay back its debt. Also, worries were expanded by Austria nationalizing Hypo Group Alpe Adria. The multi-billion euro bailout came after ECB President Trichet personally intervened, urging swift action to prevent contagion through the country‚Äôs entire banking system.
The unease in financial markets helped the dollar which gains when investors seek safe-haven. The risk appetite seen yesterday in higher-yielders like the Aussie waned. The greenback is also strengthening on its own fundamentals as employment and consumer spending data have been better-than-expected the past two weeks, which has helped increase speculation that the Fed may move sooner than expected on exiting its unconventional loose monetary policy. The FOMC begins meeting today, and while the bank is not expected to make any policy changes in its statement tomorrow, traders are at least expecting the bank ot acknowledge the improved outlook.