Daily Forex Snapshots

Asian Session - Fed Leaves Door Open for Further Easing

October 30, 2008 11:00 AM CET

G10 Advancers and Decliners vs USD

	SEK	2.85
	CAD	2.12
	NOK	2.04
	EUR	2.00
	DKK	2.00
	GBP	1.01
	AUD	0.75
	NZD	0.27
	CHF	0.18
	JPY	-1.25

Global Indexes

Current Level

% Change

Nikkei 225 Index	9,029.76	+ 9.95
Hang Seng Index	13,908.90	+ 9.50
Shanghai Index	1,763.61	+ 2.54
FTSE 100 Index	4,242.54	+ 8.05
CAC 40 Index	3,402.57	+ 9.23
SMI Index	5,880.57	+ 6.17
DJIA futures	9,195.00	+ 3.85

World Markets

Current Level

% Change

Gold	773.31	+ 2.43
Silver	10.23	+ 3.59
VIX	69.96	+ 4.48
Crude wti	69.75	+ 3.33
USD Index	83.29	- 2.09

Todays Calender

Estimates

Country / GMT

ILO unemployment rate, %	7.2	7.2	GE / 7.00
Retail sales, m/m (sa)	0.2 ,1.4%	0.6 ,2.7%	NO / 9.00
Retail PMI, index	--	46.2	EZ / 9.00
EC Economic Sentiment (Oct)	86.0	87.7	EZ / 10.00
GDP (Q3 1st Est.) (q/q Ann.)	-0.5%	2.8%	US / 12.30
Initial Jobless Claims	475K	478K	US / 12.30

Currency Tech

AUDUSD
R 3: 0.7355
R 2: 0.7239
R 1: 0.7065
CURRENT: 0.6849
S 1: 0.6625
S 2: 0.6339
S 3: 0.6009

EURJPY
R 3: 136.39
R 2: 131.49
R 1: 131.04
CURRENT: 130.09
S 1: 125.88
S 2: 121.40
S 3: 120.23

USDSGD
R 3: 1.5189
R 2: 1.5044
R 1: 1.4951
CURRENT: 1.4678
S 1: 1.4579
S 2: 1.4551
S 3: 1.4489

Market Brief

The Usd was significantly weaker in the Asian session, as regional equity markets rallied and risk aversion eased. The EurUsd rallied from 1.2820 to 1.3297, while the UsdJpy traded up from 96.45 to 99.13.
The broad Jpy selling carried over into carry trades, with AudJpy (currently our favorite carry trade) surging to 67.98 from 63.81 and EurJpy now trading above the break out lvl of 127.50. Pressure on Emerging markets eased slightly, with UsdMxn falling to 12.79 as assorted rescue packages by the IMF and news the Fed is providing a short term swap facility of $120bn to Singapore, Korea, Mexico and Brazil has further helped sentiment. Commodity prices crept higher, with crude wti up 3.30% and gold 2.43%. Yesterday's Wall Street session failed to rally on the back of the Fed 50bp cut, but Asia took the cut as a positive sign and has been rallying since the open. While interest rate differentials are not the primary driver of FX pricing, there is a growing feeling that the currencies low yield is undesirable and may look for opportunities to hold higher yielders.

While the other major central banks are expected to cut rates starting next week, lessening the differentials, we should see the Usd come under selling pressure near term. In addition, with the Fed accompanying statement clearly not ending speculation that rates could settle at 0.50.% in Q1, the lack of competitive rates could have longer lasting effect on the greenback.

Markets are still debating the effect of yesterday's Fed rate announcement. The FOMC eased interest rates by 50bp to a 4-year low of 1.00% which was widely expected. Additionally, in highlighting that "downside risks to growth remained" the Fed's change to an overt loosening bias keeps the door open to further easing. Market are expecting for the Fed to lower rates to a 40-year low of 0.50% by Q1 (in two 25bp cuts). It seems that any lingering concerns over inflation have now completely vanished, with even the most hawkish members worried over deflation. The Fed focus is firmly on the economic slowdown and evolving slack in consumption.

ACM Advanced Currency Markets SA (hereinafter referred as ACM) is a professional financial intermediary, directly regulated by the Swiss Federal Department of Finance, Anti Money Laundering Control Authority. As forex specialist, ACM provides only currency trading via highly professional forex trading software. All customers are aware that this information or any part thereof has been prepared without taking account of your objectives, financial situation and/or needs. This information is not intended as personalized investment advice and does not constitute a recommendation. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. The analysis is based on the information which ACM finds reliable and accurate, but ACM does not assume any responsibility for any material nor for the transactions made on the basis of the information or the estimates of the analysis. ACM cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct, indirect and/or consequential loss arising from any use of this information, document or its content. All opinions and estimates constitute ACM analysis as of the data and are subject to change without notice. ACM does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions. Past performance is not a reliable indicator of future performance.