The US dollar is trading broadly lower against the major currencies as Federal Reserve officials stated yesterday that they 'will provide additional accommodation if needed'.

Policy makers have seemed to shifted their focus more towards inflation levels and expectations as yesterday's statement made more mention of it than the previous August 2010 Federal Open Market Committee statement. EUR/USD broke through key technical levels (the 200-day simple moving average and the August highs) rising to nearly 1.3395 on the back of USD weakness. Eurozone core-peripheral bond yield spreads have continued to ease, however still remain at elevated levels as bond auctions in the peripheral nations continue. Portugal issued 450 million euro of 4-year bonds at an average yield of 4.695% (compared to an average of 3.621 per cent at a previous auction) and 300 million euro of ten years at 6.242 per cent (up from the previous 5.321%).
 
The greenback softened against the yen as USD/JPY fell to around 84.50 and is currently trading around 84.65. BOJ intervention risk looms while USD/JPY appears to get comfortable below 85.00.
 
The Bank of England released its Monetary Policy Committee meeting minutes which showed a vote of 8-1 as expected with Andrew Sentence dissenting again. The key take away from the minutes is that policy makers stated, "For some of those members, the probability that further action would become necessary to stimulate the economy and keep inflation on target in the medium term had increased". The prospect of additional stimulus sent the pound lower as EUR/GBP climbed to session highs near 0.8545 from earlier lows around 0.8465.