The US dollar traded significantly lower against major trading counterparts, as a surprise Federal Reserve interest rate cut eased risk aversion across financial market.

USD/JPY is grossly oversold having stretched itself more than 500 points from the 200-period moving average, but massive volatiliy in the pair creates very wide ranging bars.

Another wild and crazy night of volatility in the currency markets sent the USD/JPY to its lowest level in more than a year.

Professional system trader Art Collins shares his daily biases in the index, bonds and currency futures markets for August 17.

Fear has now replaced greed as the underlying emotion in the marketplace.

Volatility rocked the markets as the Dow plummeted as much as 340 points intraday before reversing to settle down only 15.69 points. Today’s move is nothing short of impressive and suggests that at least for the time being, US stocks and carry trades have hit a short term bottom.

The Chinese yuan declined the most in a year as continued losses on US subprime concerns rocked currency markets in the overnight session.

The Dow Jones Industrial Average continued its recent rout as the Fed remained helpless through market turmoil, sending the Japanese Yen to its largest single-day gain since 1998.

Currency technical analyst Jamie Saettele analyzes the British pound against the Japanese yen, Swiss franc, and Australian dollar.

The idea that the Aussie would bottom near .8162 and head higher was certainly wrong as the AUD/USD has plummeted below .8000.