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The U.S. Dollar is trading better against most major currencies with the exception of the Japanese Yen as investors removed risk from the equation overnight. The Dollar was under pressure on Wednesday as traders reacted to the previous day’s FOMC statement. In its statement the Fed said that interest rates would remain low for a prolonged period.

U.S. stock indices soared to the upside and finished sharply higher driven by greater demand for higher yielding assets. Tuesday’s decision by the FOMC to keep interest rates low for an extended period was the catalyst behind Wednesday’s rally. Because of the low interest rates the world is using the Dollar and the Yen as funding currencies.

The U.S. Dollar finished down against most major currencies. From the start it was under pressure as trader demand for risk pressured lower yielding currencies. The early morning weakness in the Dollar helped to drive up demand for high risk equities and commodities. Tuesday’s move by the Fed to leave interest rates unchanged for a prolonged period of time set the tone for today’s weakness.

U.S. equity markets turned around late in the trading session after investors determined that the new regulatory overhaul plan for Wall Street was not as restrictive as previously thought.

The Dollar is trading higher overnight as traders await key economic reports and tomorrow’s Federal Reserve Open Market Committee meeting. Overnight, traders are reacting to less demand for risk on concerns over a Greek bailout and a debt cut for the U.K.

Key reports today include Empire State Manufacturing, Treasury International Capital and Industrial Production.

The lack of major economic reports today means the direction of the Dollar is likely to exert more influence on the U.S. equity markets. With the Dollar up overnight because of risk aversion, traders are selling equities. Yesterday’s tight trading range and lack of follow-through during the New York session may have been indications that the stock markets are overbought.

The EUR USD finished the day higher after the Greek parliament approve a package of budget cuts and tax increases. These financial reforms prompted Greece’s prime minister to state that it wouldn’t need aid from other European Union members. This was probably a response to reports from earlier in the week suggesting that Germany and France stood ready to provide aid to the struggling nation.

The Euro was under pressure throughout the New York session as uncertainty over the Greek bailout package encouraged more selling. Downside momentum dried up as the market approached last week’s low at 1.3443. This triggered a late session short-covering rally which helped erase close to half of its losses.

The U.S. Dollar is trading higher this morning against most major currencies except the Japanese Yen as global sovereign debt and economic issues drive up demand for lower yielding assets.

The U.S. Dollar is mounting a strong rally late in the trading session following news that the Fed is set to hike the discount rate 25 basis points to 75 basis points. While not actually beginning a tighter monetary policy, a hike in the borrowing rate charged to member banks is a sign that the Fed is getting ready to begin removing stimulus and raising other key interest rates.

The U.S. Dollar is soaring as China surprised the Forex markets with a 50 basis point hike in its bank reserve requirements. This move by China is an attempt to cool credit without tightening interest rates. The intention of China’s central bank is not to derail the economy but to preserve its expansion.

All three major stock indices finished the day sharply higher after earlier weakness driven by a possible pact between the EU and Greece and better than expected weekly jobs data.

The EUR USD is trading flat to lower this morning as traders await details on the Greece rescue plan. Traders seem a little more confident this morning now that a pact has been reached. This is helping to stabilize the Euro and keep it from breaking further. Once the details of the actual decision are released, this market should rally as fresh buying and short-covering should drive it higher.

The Euro finished lower as the lack of concrete news regarding the European Union’s plan to guarantee Greece’s debt caused investors to remain nervous and skeptical that a resolution would be reached over the next few days.

Stock Indices, gold and crude oil are trading relatively flat overnight. Yesterday’s strong buying has been met with uncertainty following the inability of the European Union to reach a loan guarantee agreement with Greece.