While some traders were distracted by the G-8 meeting and the possibility the BRIC nations will propose a plan to make central banks less dependent on the U.S. Dollar as the world’s reserve currency, other traders focused on why they should be long the Dollar at this time. These traders live in the now and are not distracted by future plans.

As long as equity markets remain under pressure, look for trader’s to be averse to risk. This should help support the Dollar against most Forex majors. Investors do not seem to care about the Treasury issuing more debt, about inflation or about the Dollar losing its status as the world’s reserve currency.

What traders want today is safety and security. No matter how much the Dollar gets bashed in the press by the People’s Bank of China and the Russian government. Global investors are showing that during times of economic uncertainty, they know they always have the Dollar to which to turn.

The GBP USD continued to lose ground on the thought the Bank of England may announce that it is increasing the amount of funds available for quantitative easing. This is in effect an announcement that the BoE is willing to flood the market with British Pounds. If the BoE announces the new plan then it is telling traders two things, one, the U.K. economy is worst than previous estimated. And two, quantitative easing is bearish for a currency and it may lead to inflation.

The weaker equity markets and thoughts of the U.S. economy starting another lower slide are helping the Japanese Yen appreciate. Trader demand for higher risk assets is diminishing. Japanese investors who moved money out of the Yen for higher yields are now buying Yen for protection against a loss. Look for the USD JPY to feel downside pressure as long as money is being lost in the equity markets.

Finally, speculators seem to be challenging the Swiss National Bank’s efforts to weaken its currency through intervention. Since March the SNB has made no secret that it wants to see a weaker currency against the Euro. This has led to two significant interventions in which the SNB aggressively bought the Euro and the U.S. Dollar while simultaneously selling Swiss Francs. Both interventions had dramatic one day effects on the Swiss Franc but each time speculators stepped in to stop the decline.

The latest action by the Swiss National Bank on June 24 triggered a massive break in the Swiss Franc but speculators went on a buying spree the very next day to help start a rally that took back more than 50% of the intervention break.

The battle between speculators and the Swiss central bank has created a range bound market that is trading both sides of a 50% level 1.0805. The sideways action and the relative ease that speculators have moved the currency in the wake of the interventions have raised questions about the effectiveness of the SNB’s strategy.