Although Black Monday could be haunting the financial markets once again, today’s rise in risk aversion and sell-off in stocks have been triggered by weak earnings from Citigroup, a sharp rise in oil prices and news that the nation’s three largest banks will be creating a rescue fund to help bail out the troubled global credit markets.

Speculation about inflation and the upcoming G7 meeting is likely to be positive for the US dollar

The US stock market reversal triggers a ripple effect in the currency market.

Currency traders want to see Friday’s retail sales and non-farm payrolls report before deciding whether all bets are truly off for an October interest rate cut.

With no US economic data released this morning, traders were sitting at the edge of their seats waiting for this afternoon’s FOMC minutes.

A delayed reaction to Friday’s non-farm payrolls report as well as the market’s expectation for tomorrow’s FOMC minutes has taken the US dollar higher against every major currency today.

Despite sharp intraday volatility, the dollar ended the US trading session not far from where hovered prior to the payrolls release.

Today’s drop in the US dollar indicates that not everyone is convinced tomorrow’s non-farm payrolls report will be as strong as the market’s 100k forecast.

The dollar is higher against the euro, British pound, Swiss franc and Japanese yen, but weaker against the commodity currencies.

Kathy Lien writes that there have not actually been broad-based dollar gains. From both a fundamental and technical perspective, this is a corrective rebound and not a turn in trend.