Daily Forex Summary on USD, Euro, GBP, JPY, AUD, CAD and NZD

(IBTimes)- The US Dollar is mixed this morning, falling against its "safe-haven" counterparts, but gaining against most of its higher-yielding peers. In the wake of S&P's decision last Friday to downgrade the US's sovereign debt rating, FX volatility has spiked over the past two days, prompting investors to exit riskier positions. While it seems somewhat contradictory, the downgrade of the US's creditworthiness has in fact spurred more demand for US treasuries and other USD-denominated assets. As stocks tumbled into bear market territory, the yield US on the 10-Yr Treasury note fell to the lowest levels since the height of the financial crisis in 2008.

However, a modest resurgence in optimism has led stocks higher this morning ahead of a Fed meeting at which speculation has arisen that the FOMC may announce further stimulus measures. While the recent declines have spooked investors, there is a silver lining to the drop in financial markets. The selloff, which permeated across asset classes, has also weighed heavily on commodity prices, which could help offset a slowing global economy. With oil prices for instance down nearly 30% from their highs earlier this summer, inflation may ease significantly in the second half of the year, removing much of the pressure on global central banks, including the Fed, to begin raising interest rates. In the near term, the USD will remain bound to its recent ranges as investors weigh the consequences of a AA+ credit rating in the US against the dollar's bid as a "safe-haven" asset backed by deep liquidity. Read more here…