The US dollar has slid back ahead of the FOMC in a couple of hours, while soon afterwards Monetary policy committee member Charles Bean is scheduled to talk and he is unlikely to talk sterling up too much.

The key factors to consider with respect to the FOMC is a change in tone. Will they remove the phrase "for an extended period", will there be more dissenters to the dovish tone? Could they even adjust the discount rate again?

The Euro has also been boosted by S&P taking Greece off negative credit watch and the agreement of some sort of deal by European finance ministers to help Greece if they need it. No details have emerged so the policy of constructive ambiguity continues from EU finance ministers.

All will soon be revealed with Euro re-testing 1.3800, cable testing 1.5210/20 and gold and oil both higher. While below these levels expect a higher dollar. A break higher on both could well prompt a sharp short squeeze towards 1.4000 and 1.5500 respectively especially as the number of sterling short positions is at its highest levels since sterling left the ERM.

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