US Dollar Rebounds On US Stock Rally

Traders continue to pare their short USD positions against major currencies like the Euro, Swiss franc, Japanese yen and the British pound. Although interest rate differentials do not favor the US dollar in the medium- to long-term, the currency has managed to recover on the back of a strong rally in US stocks after the Fed cut the benchmark rate from 3% to 2.25% and signaled it won’t hesitate to cut rates further should the situation arise. The greenback also got some support after better-than-forecast earnings from Morgan Stanley and as regulators for Fannie Mae and Freddie Mac eased capital requirements to allow them to buy more loans.