He also noted that the outlook to growth has worsened. The Federal Reserve announced a new commercial paper lending facility to jump start funding for companies and given Europe's uncoordinated effort at crisis management its is another sign of US leadership in the present climate. Dollar trading range was 1.3481 / 1.3743 against Euro and a low of 1.7320 and a high of 1.7660 against sterling.
Sterling enjoyed a modest rally against the US$ following Mondays slide , after Bernanke's statement regarding US interest rates and Chancellor Darlings expected statement this morning on the part nationalisation of some of Britain's largest banks which is expected to cost from £35-50 billion. The plan is also expected to contain a guarantee that the government will make available all required cash for their day to day operations. All this came after a hectic day on the equity markets which saw bank shares tumble, HBOS down 41% RBS down 39.2% and Lloyds TSB down12.9% from the previous day.
The Euro recovered off recent lows as the market saw the selling overdone. The rally in the Oil price to just above $90 a barrel helped the Euro as did some steady buying in EUR/JPY before stocks crashed again removing that support. European companies are caught in a financing squeeze that is leading them to cut investments and inventory in moves that are likely to lead to losses and intensify the economic slowdown. Yesterday German Industrial Orders jumped unexpectedly to 3.6% from -1.4% previously. Looking ahead, today German Industrial Output is expected at -0.1% vs. -1.8%.
The Australian Dollar had an extremely volatile day with the market gaining off the extreme reaction lows on Monday. The RBA slashed rates by 1% and sparked a knee jerk 2 cent sell off before regaining 3 cents on improved risk sentiment.