John Kicklighter must read www.dailyfx.com

http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2010/11/02/DailyFundamentals11012010.html

FOREX: Dollar Recovery is Based on FOMC Threat, Not Manufacturing Strength
By John Kicklighter, Currency Strategist
02 November 2010 02:36 GMT •Dollar Recovery is Based on FOMC Threat, Not Manufacturing Strength
•British Pound Advance Curbed by Mixed Housing, Factor Data and Concern over Upcoming BoE
•Australian Dollar Surges after RBA Ignores CPI Data, Hikes to 4.75%
•Euro Under Greater Stress as Regional Finances Coming Into Focus, Fed Threatens weaker Dollar
•New Zealand Dollar Backs off Two-Year Highs as Inflation Expectations Cool, Wages Increase
•Japanese Yen Temporarily Plunges on Intervention Fear, Later Chalked up to Miss-Hit

Dollar Recovery is Based on FOMC Threat, Not Manufacturing Strength

Often times, in the pursuit of an easy and tidy explanation; we find that financial media and our own analysis guides us to a dubious account of the market’s fundamental developments. That said, it is important to realize that cause and effect is not the same thing as coincidental happenstance. This is the critical view we need to take of the US dollar and S&P 500 through Monday’s session. It is easy to fall back into the suggestion that the global round of manufacturing data (bullish across the board) was a key driver towards risk appetite or late-session confidence in the greenback. More credible is the reality that we are seeing both the benchmark currency and speculatively-defined equity market respond to the volatility and ultimate bounds imposed by the big-ticket FOMC rate decision