Watch the Moneybomb Video Feed Free!

NEW YORK (Forex News Now) – In early forex trading news today, the U.S. dollar index took a beating, reaching a new low for 2010 at 76.259, while Singapore and Australia both showed strength in their respective currencies.
The U.S. dollar index, which tracks the value of the dollar versus a basket of major currencies, fell by 1 percent at its deepest point to 76.259.  This is the lowest mark reached since last December.  The index appears to be on a downward trendline, heading to a support level of 75.95.  This would put the index close to the 74.71 mark reached last November.
The move comes as investors continue to flock to other currencies backed by higher yields and more stable economies.  The Aussie in particular has surged, soaring to a 28-year high at $0.9994 today, up 11% in 2010 and 24% from a low point this past May.
Australia
The resurgence of the Aussie is an interesting case study in the dynamics of global currency today.  The Australian economy was the first to raise interest rates in the developed world following the global recession, and has shown strength while other economies – namely that of the United States – have continued to demonstrate systemic weakness.
Of course, the Aussie has encountered resistance at parity, with options barriers at $1.0000 blamed for the slight retreat of the rally.  With that being said, as long as the dollar continues to depreciate, the Aussie will continue to rise until the psychological barrier of parity is broken.
With the pending stimulus actions in play for November, that may happen sooner rather than later.
Singapore
The Singaporean dollar also advanced due to forex trading news after the Monetary Authority of Singapore declared it would maintain “modest and gradual appreciation” in its currency. Currently, the dollar trades at S$1.2888, and is down -0.46% on the day.
Looking at Singapore is another example of an economy at the other end of the spectrum from the economic situation in the United States. Singapore, a slight net exporter of goods, has experienced an estimated 10.3% of year-on-year GDP growth in the third quarter, and remains on track for a positive growth forecast for 2010.
U.S. investors will still be driven primarily by forex trading news coming from major partners, such as Japan.  Today’s fall of the dollar index places even more pressure on the Bank of Japan to act, since USD/JPY is currently down 0.4% at 81.46.
While this mark is up from the day’s low of 80.88, it still will prove to be an influence on the dollar throughout the week

GLOBAL MARKETS-Dollar drops as more monetary stimulus seen

NEW YORK, Sept 29 (Reuters) - Rising expectations central banks will step up monetary stimulus to support fragile economies drove the dollar to a five-month low against the euro on Wednesday and fed profit taking in stocks.

Investors trimmed their U.S. and European equity positions while an uncertain economic outlook kept commodity prices from rallying too strongly despite the benefit they often get from a sagging U.S. dollar.

Spot gold XAU= did edge up to fresh record high of $1,313.20 and silver XAG= set its best level in 30 years. Oil made only a modest gain on the day.

"We obviously have a negative combination for the U.S. dollar, and the Fed opening the door for potential easing has just stoked fears of dollar weakness and currency debasement generally," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.

Wednesday's contrasting reports of Chinese [ID:nTOE68S046] and European [ID:nLDE68S0LU] economic and business sentiment advancing this month added to pressure on the greenback.

There is mounting speculation the U.S. Federal Reserve may engage in quantitative easing -- a process of buying up bonds and other assets to put fresh cash into the economy rather than through lower borrowing costs -- sooner rather than later.

Last week, the Fed said it was prepared to do just that if it were necessary to stimulate the recovery and avoid deflation. The Fed's benchmark interest rate is already at zero to 0.25 percent, leaving no room to stimulate through conventional measures.

In midday U.S. trade, the Dow Jones industrial average .DJI fell 45.45 points, or 0.42 percent, at 10,812.69. The Nasdaq Composite Index .IXIC dropped 9.69 points, or 0.41 percent, at 2,369.90.

The Standard & Poor's 500 Index .SPX lost 5.52 points, or 0.48 percent, at 1,142.18. However, for the month the index is up nearly 9 percent, its best monthly performance since May 2009 and before that the best showing since March 2000.

Hewlett-Packard Co (HPQ.N) rose 1.4 percent to $42.25 after the computer and printer maker forecast 2011 profits above estimates. For details, see [ID:nN28273797]

Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco, said the market was technically overextended, but a recent pattern of buying on dips could re-emerge as fund managers "window dress" their portfolios.

European shares gave up earlier gains after the U.S. market opened weaker.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.61 percent at 1070.77. Weaker retail shares after disappointing figures from Swedish fashion group Hennes & Mauritz (HMb.ST), the world's third largest clothing retailer, proved a drag on the index.