Daily Forex Snapshots

Fed Bailout Approved, Wells and Citi battle for Wachovia

October 03, 2008 8:38 PM CEST

G10 Advancers and Decliners vs USD

	Nzd	0.78
	Gbp	0.77
	Chf	0.70
	Aud	0.35
	Nok	0.28
	Eur	0.20
	Dkk	0.18
	Sek	0.05
	Cad	-0.06
	Jpy	-0.41

Global Indexes

Current Level

% Change

DJIA Index	10,705.00	+ 1.40
S&P 500 Index	1,147.30	+ 2.04
NASDAQ 100 Index	1,545.00	+ 2.28
FTSE futures	4,983.00	+ 1.58
CAC futures	4,063.50	+ 2.36
DAX futures	5,824.00	+ 1.91
SMI Futures	6,895.00	+ 2.04

World Markets

Current Level

% Change

Crude wti	94.86	+ 0.95
Gold	839.05	+ 0.32
Silver	11.62	+ 7.11
USD Index	80.42	- 0.03
VIX	42.58	- 5.92

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R3: 0.7945
R2: 0.7860
R1: 0.7822
Current: 0.7750
S1: 0.7740
S2: 0.7700
S3: 0.7631

EURJPY
R3: 149.28
R2: 147.48
R1: 145.64
Current: 1.4537
S1: 145.20
S2: 144.58
S3: 144.00

USDSGD
R3: 1.4600
R2: 1.4575
R1: 1.4515
Current: 1.4489
S1: 1.4463
S2: 1.4312
S3: 1.4244

Market Brief

The Usd gave up minimal ground to the majors based on concerns about the global economy continue softening. The EurUsd is slightly off yesterday’s close trading with a 1.38 handle, while the UsdJpy gained moderate strength up 70 pips breaking the 106 price. The GbpUsd rose over 100 pips to the mid range of 1.77, as the BoE addressed the recent credit freeze in the UK. Commodities are mixed with oil marginally higher at 94, while gold fell 1% to 826. Interest rate markets remain very volatile, with 2yr treasury yields widened 11bps following the bailout approval, but rates still remain under 2%. Equity markets were as higher by over 200pts on the Dow earlier, but gave up those gains up around 80 pts. This reaction to the bailout is unclear, we will need more time to see what the consequences will be to the overall marketplace.

Eurozone retail sales came in slightly higher than expected at 0.3% vs. 0.1%. In addition, PMI services were also a bit better than expected at 48.4 vs. 48.2, still a historically low reading. The economic environment in the Eurozone points to a period of slowing growth. This trend is symptomatic of the deteriorating conditions globally. UK PMI didn’t meet expectations at 46.0 vs. (cons) figure of 48.0, this is further evidence confirming that the country is in a recession. Despite the weak data, the BoE addressed the issues within the credit markets, and are looking to utilize monetary policy tools to create liquidity. The cable rallied off of this news, but this is again, a short term solution. We remain bearish on the sterling as the fundamentals point to further losses, our trading range for the GbpUsd is 1.76-1.80.

Unemployment data came in substantially higher at 159k vs. (cons) 105k, this had a minimal effect on the market. The unemployment rate came in line with expectations at 6.1%, which will give the Fed more leverage to lower rates before year-end. Further consolidation in the financial sector as Wells Fargo battles with Citigroup for Wachovia. Wells bid $15.1bln for Wachovia displacing Citigroup’s previous bid of $2.16bln. In addition, the approval of the $700bln bailout is the central story today giving investors and Traders alike a bit of closure to the open ended issues behind the losses stemming from illiquid assets.

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Currencies up against the dollar while Asian markets continue to dwindle as the U.S Senate’s approval of the new rescue bill fails to quell fears of a global economic slowdown.

October 03, 2008 9:51 AM CEST

G10 Advancers and Decliners vs USD

	CHF	0.64
	EUR	0.46
	NOK	0.46
	DKK	0.45
	AUD	0.45
	GBP	0.4
	SEK	0.36
	CAD	0.26
	JPY	0.19
	NZD	0.1

Global Indexes

Current Level

% Change

Nikkei 225 Index	10938	- 1.94
Hang Seng Index	17824	- 2.12
Shanghai Index	2293	- 0.16
FTSE futures	4905	- 1.60
DAX futures	5715	- 2.36
DJIA futures	10588	+ 0.29
Nasdaq futures	1517	+ 0.45

World Markets

Current Level

% Change

Gold	845.55	+ 1.09
Silver	11.39	+ 5.03
VIX	45.26	+ 13.69
Crude wti	93.37	- 0.64
USD Index	80.118	- 0.40

Todays Calender

Estimates

Country / GMT

BoE Housing Equity withdrawal	2.5B	5.0B	UK / 08:30
Euro Zone retail sales	0.3%	-0.4%	EUR / 09:00
Non Farm Payrolls	-95K	-84K	US / 12:30
US Unemployment rate	6.1%	6.1%	US / 12:30
ISM Non - Manufacturing Composite	50.0	50.6	US / 12:30

Currency Tech

Market Brief

All the Asian equity markets were down this morning as continued fear of a global recession brought on by the economic woes of the U.S financial markets. The Nikkei finished yesterday’s session at a 3 year low as risk aversion drives the Yen higher. The
Dollar remains resilient in light of the NFP figures due out today. The consensus is for a continued decline in the NFP number as the U.S economic crisis bares down on the U.S job market. The dollar strengthened across the board in yesterday’s session as the amended $700Bn rescue bill is one step closer to being ratified by the House of Representatives. The only exception to this rule was the Yen, reaching a session low of 104.84 – risk aversion being a major factor at play here.

The EURUSD currency pair traded 250 pips lower (to a low of 1.3747) in absolute moves yesterday as both the comments of the ECB’s Trichet on the state of the European economy and the imminent ratification of the rescue bill spurred on the dollar’s attractiveness. Trichet mentioned the lack of a unified and collective front in the EU with regards to monetary policy and possible rescue packages like in the U.S – sending the euro tumbling. The price action in Asian markets this morning saw the Euro drop further after fighting back in the end of trading yesterday. The yen giving back some of it’s gains many short sellers taking their profits. The USDJPY has risen from this morning’s 104.84 low, rising consistently to 105.30 levels as Europe opens.

There is a lot in store for today’s trading session, the NFP’s in the U.S and an expected “Yay” from the house of representatives. We expect an accrue in volatility today as the markets are uneasy for both economic and political data ahead. Continued risk aversion and dollar demand are strong market movers.

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