The question for the dollar is the level of uncertainty. If the picture will clear up, this will help the dollar, while high uncertainty will weaken it.

Indeed, while China and other Asian countries were slowing down during the end of 2011, and while Europe most likely entered a recession, the pace of growth picked up towards the end of 2011. Q3 saw an annualized growth rate of 1.8% and estimations for Q4 stand on 3%.

The greenback registered gains of more than 1% on the day against a number of major currencies, including the euro, the Scandies, the Swissie and the Aussie. Commodity prices also suffered badly – gold has lost nearly 4% since the start of the week, while oil was off 1.5%. Equities fell hard, the DAX down 3.3%, while the bond yields of troubled European sovereigns were once again much higher; the Italian 10yr yield up 30bp at 6.58% at one stage. Apart from the dollar, safe-havens like treasuries, bunds and gilts performed well. Video:

For the first time since June, the statement will be followed by a press conference by Ben Bernanke. A lack of big announcements in the statement can be complemented with a press conference that can trigger high volatility.

The beginnings of trading sessions tend to see sharper moves. This is best seen in the beginning of the European / London session. In many cases, these sharp moves occur also towards the end of these sessions and in the opposite direction of the day’s trade. Why?

The initial reaction is a stronger dollar. EUR/USD is down but slightly rebounds. The market is still digesting. This might change later, although the probability is not very high. USD/JPY is on the rise, moving to 76.50, away from the intervention zone.

The statement published on Wednesday, 18:15 GMT will be closely watched and will likely move the markets for quite some time. Here are 7 scenarios for this important event, and the expected impact on the dollar.

If the January to August trends of this year are continued (deficit 22% higher vs. forecast), then the deficit for this year is likely to be around 11%.  Herein lies the problem.  The longer the EU and IMF lend to a country which is going in the opposite direction to the conditions put onto that lending, the bigger the eventual train crash will be. As we wrote yesterday in our blog, September will be seen as the month in which Greece passed the point of no return.

The safe haven currencies, the Swiss franc and the yen, jumped against the dollar. So did the pound. The euro jumped, but this has a lot to do with the the first verbal intervention:

Before the close: US yields were higher, and the dollar is weaker, but there are other reasons for a weak dollar.