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Global Coordinated Rate Cut Does Little to Stabilize Markets
October 08, 2008 6:35 PM CEST
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G10 Advancers and Decliners vs USD |
| | Jpy | 1.67 |  | | | Chf | 1.09 | | | | Dkk | 0.79 | | | | Eur | 0.68 | | | | Nok | 0.63 | | | | Sek | 0.54 | |  | Gbp | -0.91 | | | Cad | -1.49 | | | Nzd | -3.70 | | | Aud | -5.48 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA Index | 9,292.59 | - 1.64 | | S&P 500 Index | 980.28 | - 1.60 | | NASDAQ 100 Index | 1,736.39 | - 1.05 | | FTSE futures | 4,371.00 | - 5.67 | | CAC futures | 3,488.50 | - 6.69 | | DAX futures | 5,048.00 | - 6.34 | | SMI Futures | 6,113.00 | - 5.24 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 86.70 | - 3.73 | | Gold | 913.87 | + 3.02 | | Silver | 11.76 | + 1.60 | | USD Index | 80.79 | - 0.23 | | VIX | 57.68 | + 7.45 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| No Major Events Scheduled | | | |
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Currency Tech |
AUDUSD
R 3: 0.7738
R 2: 0.7355
R 1: 0.7157
CURRENT: 0.6854
S 1: 0.6754
S 2: 0.6715
S 3: 0.6683
EURJPY
R 3: 148.69
R 2: 146.85
R 1: 144.97
CURRENT: 136.81
S 1: 134.56
S 2: 133.53
S 3: 130.50
USDSGD
R 3: 1.4859
R 2: 1.4760
R 1: 1.4726
CURRENT: 1.4692
S 1: 1.4489
S 2: 1.4458
S 3: 1.4374
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Market Brief |
The Usd was mixed in the early trading session following a series of rate cuts from central banks in Europe and Asia. The EurUsd gained roughly 80 pips to the mid range of 1.36, while the UsdJpy fell below the 100 level for the first time since March of this year. The GbpUsd fell 100 pips, trading with a 1.73 handle. The Equity markets are negative in the US and Europe despite efforts by central banks to create stability. Bonds yields continue to tighten with the 2yr at 1.4% and the 10yr at 3.5%, which is representative of the increasing risk aversion in the marketplace. Commodities followed suit, with gold trading at $907, up 2% on the day, and oil compressed at $89 down about 1%.
The ECB participated in a global effort to stabilize the financial system through cutting rates. The ECB lowered the refi-rate 50bps to 3.75%, which was in tandem with 6 other central banks. The Euro recovered some losses following talks that additional intervention will be taken to address the financial crisis. The UK took similar action cutting rates 50 bps to 4.50%, the cable slipped on the rate reduction, which was probably necessary regardless of the current situation in the financial sector. The economic conditions in the UK are deteriorating rapidly, and some form of easing in monetary policy was becoming more and more necessary. Our outlook for the Sterling is bearish, with a trading range between 1.74-1.70.
Volatility continues to reach record highs with the VIX trading above $58 on jittery market conditions. The dollar is likely to see more adversity in coming days as the fundamentals are not in place to carry momentum beyond the 1.30 level. The situation in Europe and Asia has given the dollar an artificial boosts, but the global economy is suffering a uniform slowdown. The Usd should trade strong against the majors, but lose steam when the markets return to rationale.
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Asian Session - Asian Equities Slide As Confidence Softens
October 08, 2008 9:51 AM CEST
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G10 Advancers and Decliners vs USD |
| | JPY | 1.65 | | | | CHF | 0.48 | | | | CAD | 0.36 | | | | GBP | 0.21 | | | | EUR | 0.04 | | | | DKK | 0.02 | | | SEK | -0.55 | | | NOK | -0.77 | | | NZD | -2.82 | | | AUD | -4.50 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 9,203.32 | - 9.39 | | Hang Seng Index | 16,114.21 | - 4.10 | | Shanghai Index | 2,092.22 | - 3.04 | | FTSE 100 Index | 4,457.11 | - 3.21 | | CAC 40 Index | 3,553.46 | - 4.79 | | DAX Index | 5,088.33 | - 4.47 | | DJIA futures | 9,399.00 | - 1.45 |
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World Markets |
Current Level |
% Change |
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| Gold | 902.50 | + 1.73 | | Silver | 11.72 | + 1.21 | | VIX | 53.68 | + 3.13 | | Crude wti | 88.04 | - 2.24 | | USD Index | 80.82 | - 0.19 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| GDP (Q2 Final) | -0.2%(+1.4 | -0.2%(+1.4 | EZ / 9.00 | | BRC Shop Price Index (Sep) | -- | +0.5%(+3.8 | UK / 9.30 | | Industrial Production (Aug) | -0.3%(-2.8 | -1.8%(-0.6 | GE / 10.00 | | Pending Home Sales Index (Aug) | -1.3% | -3.2% | US / 14.00 |
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Currency Tech |
AUDUSD
R 3: 0.7738
R 2: 0.7355
R 1: 0.7157
CURRENT: 0.6854
S 1: 0.6754
S 2: 0.6715
S 3: 0.6683
EURJPY
R 3: 148.69
R 2: 146.85
R 1: 144.97
CURRENT: 136.81
S 1: 134.56
S 2: 133.53
S 3: 130.50
USDSGD
R 3: 1.4859
R 2: 1.4760
R 1: 1.4726
CURRENT: 1.4692
S 1: 1.4489
S 2: 1.4458
S 3: 1.4374
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Market Brief |
The Usd was range bound in irregular trading in Asian Session, as regional stock markets have come under significant pressure. The EurUsd, in spiky trading, traded from 1.3660 down to 1.3545, while the UsdJpy broke briefly below the psychological 100.00 barrier before trading up slightly to 100.24. Risk aversion was the central theme as equity markets across Asia fell sharply as economic worries intensify. Yesterday, Wall Street’s close was dismal, with the S&P falling -5.73% and losses have just been amplified in Asia. The Nikkei has dropped -9.38% and the Hang Seng -5.55% (HKMA stepped in with an emergency 100bp base rate cut ). Commodities prices were mixed, responding accordingly to perceptions of safe havens vs. risky trades, with crude dropping to $88.06bbl and gold $895.60oz, up 1.0%.
Yesterday, the Fed announced that it would trade in commercial paper market & provide unsterilised liquidity to firms being hurt by the lack of liquidity. This should help companies with short term funding obligations, such as payrolls and inventories, meet their requirements. This is the first time the Fed has participated directly in the commercial paper markets. Elsewere, Bernanke made it clear that the next move in monetary policy will be down, stating “Overall, the combination of the incoming data and recent financial developments suggests that the outlook for economic growth has worsened and that the downside risks to growth have increased. At the same time, the outlook for inflation has improved somewhat, though it remains uncertain. In light of these developments, the Federal Reserve will need to consider whether the current stance of policy remains appropriate”. We read this and other indicators as a 50bp cut at the next meeting. However, even with these measures confidence is still very shaky and equity markets collapsed.
In the UK, Treasury officials are expected to announce a capital injection of around $200bn into the nation’s important banks. The plan will have the government taking stakes in the banks to boost confidence. In addition, the BoE will be meeting tomorrow and markets are pricing in a deep cut. After Monday’s RBA surprise 100bp, we could see MPC members take similar action, since inflation concerns are now secondary.
With a real lack of timely, significant economic data, it will be another day of keeping one eye on the equity market and the other on the news wires. We expect the currency markets will move lock-and-step with macro development with the Usd & Jpy gaining, as confidence erodes and risk aversion increases
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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.
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