The USD is mostly higher overnight and into early New York as traders sold the majors as risk-aversion continued into Tuesday’s Asian trade; equities were lower across most Asian bourses with the Nikkei 225 down over 200 points adding fuel to the fire. Commodities are lower after staging a modest corrective rally yesterday; traders are heavily focused on the US Fed FOMC meeting today and tomorrow with any change in policy unlikely but most are bracing for a surprise of some kind that will take the wind out of commodities pricing as equities fall in response. Perhaps as a prelude to a move by the Fed the RBA raised near-term cash rates 25 BP overnight in an unexpected move; analysts are anticipating more rate hikes from the Aussies in 2010 as well. In response to overnight news the Greenback began to rally in early Europe as traders failed to push the majors higher on the news; most pairs have broken out to the downside with technicians targeting more gains for the USD near-term. GBP high print in early Asia at 1.6423 before turning lower; traders note the rate found active sellers ahead of bids at 1.6350 area with some desks reporting sovereign bids at support. Stops were targeted and triggered as the rate slide under 1.6330 area with more noted below the figure. Low prints at 1.6259 before shorts were seen covering and the rate is trying to regain the 1.6300 handle in early New York. EURO firmed early for a high print at 1.4812 before following Cable lower; traders note stops under the 1.4750 area with more under the figure as the rate broke out to the downside under the 1.4680 area. Low prints at 1.4625 in late Europe have done a lot of technical damage with some analysts projecting a test of the 1.4400/20 area near-term. Also of note, UBS has issued a sell recommendation in the EURO with a target of 1.4400 area. USD/JPY remained unfazed by USD strength elsewhere holding a tight range; high prints at 90.50 on the RBA news with lows at 89.86. Traders note the pair needs to hold 89.80 to the downside to keep any try for stops above the 90.80 area alive today. USD/CHF has rallied to the 50 day MA and is holding firm on the 1.0300 handle; high prints at 1.0340 are finding offers ahead of 1.0350 as expected; low prints at 1.0194 found large names on the bid as system accounts sold into the 1.0220/30 area yesterday. Stops are rumored to be resting above the 1.0380 area with a close on the 1.0400 handle likely to negate bearish enthusiasm near-term. USD/CAD is making a try for the 1.0880 area again this morning lifting to a high print at 1.0856 before finding resting offers; low prints at 1.0756 failed to find stops said to be under the 1.0740 area overnight. Traders note that a solid close over the 1.0880 area likely will push the bears to the sidelines. In my view, the USD is building a solid base for another leg higher. With the high degree of interest on the buy side and weak equities despite solid earnings reports it should be obvious that the markets are voting that the FOMC will surprise the markets with some sort of tightening soon. Look for US data the next few days to be neutral for equities and traders to liquidate their risk trades driving the USD higher into the end of the week.