Daily Forex Snapshots

US Session: Dollar Falls on Coordinated Bank Rescue in Europe

October 13, 2008 5:51 PM CEST

G10 Advancers and Decliners vs USD

	Aud	4.67
	Gbp	2.03
	Nzd	2.02
	Nok	1.81
	Sek	1.67
	Eur	1.64
	Dkk	1.62
	Cad	0.86
	Chf	.80
	Jpy	0.19

Global Indexes

Current Level

% Change

DJIA Index	8,828.88	+ 4.47
S&P 500 Index	942.33	+ 4.79
NASDAQ 100 Index	1,728.11	+ 4.77
FTSE 100 Index	4,138.50	+ 4.99
CAC 40 Index	3,398.77	+ 7.00
DAX Index	4,920.85	+ 8.29
SMI Index	5,779.96	+ 8.09

World Markets

Current Level

% Change

Crude wti	81.90	+ 5.41
Gold	845.60	- 0.50
Silver	10.61	+ 5.40
USD Index	81.17	- 2.20
VIX	64.12	- 8.34

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R 3: 0.7357
R 2: 0.7148
R 1: 0.6877
CURRENT: 0.6733
S 1: 0.6437
S 2: 0.6331
S 3: 0.6245

EURJPY
R 3: 144.97
R 2: 141.07
R 1: 139.71
CURRENT: 137.19
S 1: 134.23
S 2: 132.24
S 3: 130.62

USDSGD
R 3: 1.5086
R 2: 1.4980
R 1: 1.4845
CURRENT: 1.4685
S 1: 1.4562
S 2: 1.4489
S 3: 1.4458

Market Brief

The Usd gave up substantial gains against most of the G10 based on rescue plan constructed by central banks in Europe and Asia. The EurUsd rose over 200 pips to the low range of 1.36, while the UsdJpy was mostly flat down about 13 pips to 100.50. The GbpUsd rallied nearly 400 pips to the low 1.74 area following the closure of the G7 meetings. Equity markets posted strong gains with the Dow up nearly 400pts after one of the worst weeks in trading since the great depression. Commodities were mixed with softs and energy related products trading higher, while metals decreased with gold down 2.30% at 830. US bond markets are closed due to the public holiday, but European govt. securities sold off with the UK 10yr yield wider by 18bps.

Activity in Europe was the main focus in FX news, this is based primarily on the plan for central banks to invest directly into financial institutions that pose systemic risk to the greater economy. This effort had a strong impact on the markets as investor confidence is slowly being restored in the Euro and Cable. The sterling posted its strongest upward move in over a month, the price swings are attributed to the historical levels of volatility we are seeing in the majors. There is definitely a need for further stability in the marketplace, but the recent coordinated resolution is a major step. We hold our stance that the EurUsd should decline to 1.30, and the GbpUsd to 1.62 by year-end.

Investors are looking for signs of a recovery, as the govt. has taken significant steps to revive the financial markets. High levels of volatility have caused extreme price swings, which is difficult for Traders to endure. The current economic environment will have to improve through stronger housing data and lower inflation would have take great pressure off the consumer. The other major component to analyze regarding the direction of FX markets will be the easing in rates abroad. This will close the window between the US Fed Funds rate versus higher yielding rates in Europe and Asia, also conducive to long term dollar strength.

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Asian Session - G7 Releases Strong Statement

October 13, 2008 9:35 AM CEST

G10 Advancers and Decliners vs USD

	AUD	4.02
	NOK	2.26
	CAD	1.93
	SEK	1.83
	NZD	1.54
	DKK	1.49
	EUR	1.45
	GBP	1.26
	CHF	-0.12
	JPY	-1.19

Global Indexes

Current Level

% Change

Nikkei 225 Index	8,276.43	- 9.62
Hang Seng Index	15,926.38	+ 7.63
Shanghai Index	2,073,57	+ 3.64
FTSE 100 Index	4,146.59	+ 5.45
CAC 40 Index	3,346.68	+ 5.35
SMI Index	5,645.95	+ 5.58
DJIA futures	8,760.00	+ 4.65

World Markets

Current Level

% Change

Gold	861.45	+ 1.34
Silver	10.56	+ 4.86
VIX	69.95	+ 9.43
Crude wti	81.11	+ 4.38
USD Index	81.47	- 1.84

Todays Calender

Estimates

Country / GMT

Producer Prices (Sep) Input	-1.5%,19.8	-2.0%,26.0	UK / 8.30
Producer Prices (Sep) Output	-0.4%,8.8%	-0.6%,9.7%	UK / 8.30
Producer Prices (Sep) Core	-0.1%,+6.0	-0.1%,+6.4	UK / 8.30

Currency Tech

Market Brief

The Usd was weaker in the Asian session as the initial reaction to the G7 plan is positive. The EurUsd climbed from 1.3410 to 1.3670, while the UsdJpy seesawed first to 101.19, before slipping to 99.57 and now failing moment on a race to 100.58. In addition, Asian regional equity indexes are positive and European & US stock futures are pointing to a positive open. G7 statement relased Friday was the pledge to "use all available tools to support systemically important financial institutions and prevent their failure". The G7 plan released lacked the real details the market was hoping for, but did convey the following points 1) unlimited liquidity in interbank lending; 2) support critical financial institutions 3) make certain that the banks are adequately capitalized, with individual banks having access to direct government or private capital sources. So far, the markets have reacted positively and traders will be watching to see if the trend continues. Should the positive sentiment continues, we expect the Jpy to come under significant selling pressure.

In the UK, inflation figures will capture the market's attention. Today's Producer Prices and tomorrow's CPI will provide the market with evidence if the UK prolonged period of high inflation is over and monetary policy can focus on growth. On that, we look for the BoE to ease rates by another 125bps over the next 12 months, bringing the base rate down to 3.25%.

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