The pound and the euro rallied significantly last night against the USD as the Federal Reserve shocked the market with a $1.15 trillion boost for the US economy. The funds will be used to buy government debt and to liquidate Fannie Mae and Freddie Mac. This has caused the US dollar to be sold off and we have broken through 1.40 again as the equity markets rally. The Fed kept interest rates on hold at 0-0.25 % as expected, however the sheer scale of the plans surprised the markets. $300 billion will be made available for longer term treasury securities and $850 billion for the ailing Fannie Mae and Freddie Mac. The FX markets witnessed big swings with EUR/USD rallying to 1.35 and USD/YEN moving back down to 95. The market is now looking for safe haven currencies outside the US dollar as currency risk is dissipated. Sterling gained against the USD but remained subdued in other areas and weakened against the EUR with a break of 1.05 now in reach.