FOREX EUROPE UPDATE - USD

The US dollar softened overnight with USDJPY leading the way, trading in a 117.46-117.92 range in Asia while EURUSD traded within 1.2840-1.2872. We believe dollar weakness is mainly a function of positioning adjustment ahead of the Thanksgiving holiday in the US and on the back of lower yields and higher oil prices on supply concerns.

Oil prices were marginally lower in Asia but remain above US$60/bbl, boosted by news of a sharp drop in output from the Trans Alaska pipeline due to strong winds.

AUDUSD traded higher on the news that Australia's biggest airline received a takeover approach from Macquarie Bank Ltd and Texas Pacific Group. In the past, however, the AUD, NZD and JPY suffered when the global economy begun to slow down.

On Tuesday, Fed Governor Warsh said that inflation "remains uncomfortably elevated" and that there are clear risks that inflation won't come down. He said that growth was "resilient" and will likely accelerate from the pace in Q3 as the housing market stabilizes.

Todays data is limited to the University of Michigan consumer confidence index final October reading and jobless claims for the week ended Nov 18, ahead of the Thanksgiving holiday tomorrow.