News in brief

• The dollar continued to be sold off yesterday after the results of the surprisingly accommodative Federal Reserve statement on Wednesday. It managed to recover late in the session against the euro as the single currency stalled ahead of some key technical levels around $1.3200.
• Many market participants have said the euro's recent run was tied largely to investors unwinding their "short" euro speculative positions. Comments from Brown Brothers Harriman in New York suggest that the volume of these "shorts" that have been unwound could be slowing down, therefore halting the euro's rally. However, despite the dollar's relative strength against the euro, it suffered against nearly all other major currencies. Market participants say that's because the dollar is still feeling the after-effects of the Fed's announcement that it plans to hold rates exceptionally low until at least late 2014, a full year later than the traders had priced into the market.
• Essentially, investors have been caught off guard by the FOMC announcement. Bernanke's comments during his press conference were also interpreted as a possible signal that further large-scale bond purchases, known as quantitative easing, could be on the horizon. The Fed's stance, coupled with the ECB's reasonably successful long-term lending program, has reduced volatility in the foreign exchange market and increased investors' appetite for higher yielding assets.
• With "risk appetite" firmly back in focus, currencies such as the Aussie, New Zealand dollars and the South African rand have strengthened at the expense of the US dollar due to the interest rates in those countries likely to stay higher than in the US with the possibility that they will remain that way for years to come. The Australian dollar traded at $1.0631 from $1.0598, while the New Zealand dollar traded at $0.8214 from $0.8168. The rand has strengthened from ZAR 8.2300 to ZAR 7.7800 within the last two weeks.
• Overnight price action. The dollar fell further against the yen during Asian trading as it struggled to recover from the Fed's dovish statement on Wednesday. Attention gradually shifted back to ongoing Greek debt talks. The dollar was at Y76.98 in early trade from Y77.46 late in New York, while the euro was back down at $1.3098 from $1.3109 and Y100.83 from Y101.50. Analysts said that while the impact of the FOMC's interest rate projections were reverberating around the exchanges, the focus of the market was also back on the euro zone crisis, notably Greece's ongoing debt negotiations and Portugal's worsening debt situation.
• The market will closely monitor what European Central Bank President Mario Draghi has to say during a speech later in the day. Comments from analysts at Bank of Tokyo-Mitsubishi UFJ: "With uncertainty over the future developments in the European sovereign debt crisis, the euro will continue to fall." Attention will also be given to Monday's European Union summit meeting and whether progress will be made on a proposed EUR100 billion debt write-down between Greece and its private-sector creditors.
• Importantly though, Portugal is firmly in the spotlight, with The Wall Street Journal reporting that investors, economists and politicians are becoming concerned the country will struggle to refinance the equivalent of $11.64 billion in debt due in 2013. Markets  will also keep an eye on US gross domestic product figures for the fourth quarter of 2011 to be released later in the day. A Dow Jones survey of economists expects an annualized 3.0% growth rate compared with 1.8% in the previous quarter. Strong US growth figures could improve investor sentiment and lead to further dollar selling, although he added market reaction to the figures was likely to be limited.  The ICE Dollar Index, which tracks the US dollar against a basket of currencies, was at 79.390 from 79.405.