The USD continued to firm against other major currencies this week, even as more sub-prime related losses were announced by major US investment banks. The USD's gains are as much the result of other currencies being marked down on lower growth and interest rate outlooks as they are short-covering of excessive USD short positioning. Riskier assets, as indicated by JPY-crosses and equities, managed to stage a rebound at the end of the week, largely on the back of news that Merrill Lynch will receive a $5 bio investment from Singapore's sovereign wealth fund, Temasek Holdings. The news comes just one day after analysts at another investment house suggested Merrill would need to write down an additional $8 bio on sub-prime tainted securities.  Full text »

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