“The U.S. is committed to a strong dollar,” said Treasury chief Paulson in India yesterday. What was he thinking? Maybe he spoke with a smile; at least the audience could have taken it for a joke. But press reports make no mention of anyone laughing.

The Federal Reserve cut interest rates by 25bp and the US dollar dropped to a new record low against the Euro and multi-decade lows against the British pound, Australian and Canadian dollars. The price action in the markets today suggests that traders do not believe today’s rate cut will be the Fed’s last.

US data on Thursday is likely to highlight weakness in the economy. However, given the extent of the recent EUR/USD move, the pair may simply consolidate around the record highs over the next two days and, as a result, any weakness in the greenback that ensues may be only short-lived.

Price Headley asks what separates champions from everybody else? Interestingly, champion traders have the same characteristics as champion athletes.

Professional system trader Art Collins shares his daily biases in the index, bonds and currency futures markets for October 31.

Todd Gordon gears up for the Fed interest rate annoucement on Wednesday, and expects more dollar weakness.

Fed fund futures continue to price in a 92 percent chance of a 25bp rate cut.

America is probably getting cheaper. And Americans are probably getting poorer. Americans owe a fortune to foreigners. As their paper money is marked down, so is the fortune they owe. They will owe less. But they will own less too.

The expectation that US interest rates are expected to decline further is quickly turning the US dollar into the new funding currency for carry trades, next to the Japanese yen and Swiss franc.

How the forex, fixed income, and equity markets will react on Wednesday will be dependent not only upon the actual policy decision by the Federal Reserve, but also on how badly the housing market is doing as well as whether some inflation risks remain.