ForexLive New York wrap-up; Deeper dollar dive

• EUR/USD breaks 1.50, reaches 1.5046
• Oil soars to $82 on weak dollar, lower inventories of gasoline; closes at 81.37, +$2.25
• Fed’s Beige Book: Stabilization or improvement in most sectors but still at depressed levels

• US commerce Secretary Locke: Weak dollar a concern; pushes up oil prices; to visit China next week, hopes to address IT piracy. US wants to up exports to cut unemployment
• House Speaker Pelosi: No second stimulus
• Larry Summers: Dollar to remain top reserve currency; no viable alternative; deficits will contract when economic growth strengthens
• Downgrade of Wells Fargo by influential bank analyst turns stocks lower late. S&P falls close to important 1080 support, down 0.9%.
• Canadian FinMin Flaherty: Growth to be sluggish; wary of CAD volatility
• Fed’s Tarullo: Breaking up big banks too hard

The dollar began to dive early on in US trade as firm commodities and upbeat US bank earnings helped buoy equity markets. Large option expiries at 1.5000 in EUR/USD helped give traders added incentive and exotics at that level were triggered just before some expired. Prices stalled at 1.5018 for a time, with several hours of 1.4980/1.5020 playing out.

Heavy corporate and real money buying dominated the early afternoon hours as hedgers were forces into the market, holding their noses and buying. Prices reached 1.5046 before before protection of 1.5050 stalled the advance. Price dropped to 1.4990 as US equities turned lower late in the session. A head and shoulders top on the near-term charts with a neckline at 1.4990 looks to be building a right shoulder.

Cable was the early star, rallying strongly once again as the BOE was less-dovish than anticipated. It reached 1.6636 where it stalled twice on the short-term charts. Look for profit-taking if 1.6575 is lost.

AUD/USD rallied to new trend highs of 0.9327, stalling at a resistance level dating back to June of last year. Risk-on was the theme du jour.

USD/CAD was ugly, rallying to 1.0583 in early North American trade, spurred by GBP/CAD short-covering, before reversing course as the dollar tumbled. Oil rallied about $5 bucks from intraday lows, helping give the Loonie a renewed shot in the arm. USD/CAD fell as low as 1.0380 before ending at 1.0425.

USD/JPY rallied toward important 91.30 resistance early in the day with GBP/JPY the driver. Exporter sales helped stall the rally but dips were modest as Japanese fiscal policy makes the US look like a paragon of fiscal virtue…We end at 91.00.