The Fed has just broadened global swap line agreements, establishing lines with the central banks of Australia, Denmark, Sweden and Norway, for a total of $30B, with $10B each for Sweden and Australia. The move comes after aggressive liquidity adds again today by Japan, and overnight by the Bank of Canada as well as the BOE and ECB. The new lines are in addition to previously agreed swap arrangements of $247B and are authorized through Jan 30 2009. The RBA has immediately responded, stating that it will offer a short term deposit facility to banks.
The USD has seen a broad lift on the Fed swap line news, whit the EURUSD easing from 1.4675 to 1.4643, with. GBPUSD dropping from 1.8535 to 1.8515. USDCHF is close to a break-out of the topside of the Asian range, probing session highs around 1.0891 with stops expected on a rally above 1.9000 that could give the USD momentum. USDJPY has traded to fresh session highs in Tokyo of 105.95 but offers are eyed here and up to 106.10 though stops loom above 106.20. AUD and NZD are moderately easier but still contained within the range seen in Asia so far.
