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US Session: The Dollar Extends Losses as Traders Brace for a 0% Interest Rate Environment
December 17, 2008 7:51 PM CET
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G10 Advancers and Decliners vs USD |
| | Sek | 4.24 |  | | | Chf | 4.16 | | | | Nok | 3.89 | | | | Eur | 2.37 | | | | Nzd | 2.32 | | | | Dkk | 2.25 | | | | Jpy | 1.18 | | | | Aud | 1.04 | |  | Cad | -0.10 | | | Gbp | -0.80 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA futures | 8,920.00 | + 0.07 | | S&P future | 915.00 | + 0.15 | | Nasdaq futures | 1,230.00 | - 0.73 | | FTSE futures | 4,368.00 | + 1.33 | | CAC futures | 3,282.00 | + 0.91 | | DAX futures | 4,756.00 | + 0.75 | | SMI Futures | 5,595.00 | + 0.27 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 41.54 | - 4.73 | | Gold | 869.20 | + 1.29 | | Silver | 11.45 | + 1.96 | | USD Index | 79.06 | - 2.01 | | VIX | 49.55 | - 5.39 |
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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: 0.7015
R 2: 0.6986
R 1: 0.6966
CURRENT: 0.6942
S 1: 0.6490
S 2: 0.6453
S 3: 0.6294
EURJPY
R 3: 128.44
R 2: 126.24
R 1: 125.10
CURRENT: 124.82
S 1: 121.67
S 2: 117.54
S 3: 115.90
USDSGD
R 3: 1.5011
R 2: 1.4972
R 1: 1.4777
CURRENT: 1.4577
S 1: 1.4530
S 2: 1.4406
S 3: 1.4182
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Market Brief |
The dollar continues to be pressured following the Fed’s momentous rate cut yesterday. The EurUsd soared an additional 380 pips to the high 1.43 price area, while the UsdJpy sunk 150pips to the mid range of 87. The GbpUsd slid 100pips through 1.55 to the low 1.54 level mostly based on expectations that the BoE will cut rates in Q1 2009. The equity markets are lower in the US and Europe, with the Dow down as much as 0.5% or 43pts consistent with a pull back in the DAX of roughly .50% or 21pts. Commodities are mixed with oil off about 5.4% to $41bbl, while gold gained 1% to $867oz.
The BoE minutes confirmed the market’s assumption that the previous 100bps cut was a unanimous decision. However, Sterling Traders initiated a sharp selloff once they learned that the central bank may cut rates and additional 100bps in January. The pullback erased a large portion of cable gains, and was isolated from continued rally by other major currencies against the dollar. Levels are likely to bottom out by end of the week, and range trade between 1.53‐1.56. In the Eurozone, CPI data came in at 2.1% which was in line with expectations. Analysts project that the inflation will drop below 2% by next month solidifying the trend of global deflation. The EBC has positioned the Euro to hold an extended period of appreciation against the dollar with their conservative approach towards monetary policy going forward.
The Usd has loss some of its status as the safe haven currency of choice as yields on domestic assets get squeezed and the Fed adopts a strategy quantitative easing. Investors are certainly pleased with the willingness of the Fed to take great measures in avoiding a deep recession. Mortgage rates dropped considerably on 30yr fixed rate products, hopefully becoming a catalyst for lending. MBA apps were higher than anticipated at 2.9% up from the prior ‐7.1% reading.
Risk Disclaimer:
Although every investment involves some degree of risk, the risk of loss in trading off‐exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make an informed decision prior to investing. The material presented here is not to be construed as trading advice or strategy. ACMUSA makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change.
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Asian Session – Usd Weakens on the Fed's 75bp Cut
December 17, 2008 11:59 AM CET
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G10 Advancers and Decliners vs USD |
| | SEK | 3.932 | | | | NOK | 3.449 | | | | NZD | 2.554 | | | | CHF | 2.501 | | | | AUD | 2.458 | | | | EUR | 2.056 | | | | DKK | 2.045 | | | | JPY | 1.744 | | | | GBP | 0.892 | | | | CAD | 0.859 | |
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Global Indexes |
Current Level |
% Change |
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| Nikkei 225 Index | 86121.52 | + 0.52 | | Hang Seng Index | 15460.52 | + 2.18 | | Shanghai Index | 1976.82 | + 0.09 | | FTSE 100 Index | 4244.5 | - 0.92 | | DAX Index | 4698.5 | - 0.94 | | DJIA futures | 8734 | - 1.77 | | Nasdaq futures | 1217.5 | - 1.89 |
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World Markets |
Current Level |
% Change |
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| Gold | 855.25 | - 0.33 | | Silver | 11.03 | - 1.78 | | VIX | 52.37 | - 7.73 | | Crude wti | 44.72 | + 2.57 | | USD Index | 80.084 | - 0.74 |
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Todays Calender |
Estimates |
Previous |
Country / GMT |
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| US Current Account | -179.0 Bn | -183.1 Bn | USD / 13:30 |
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Currency Tech |
AUDUSD
R 3: 0.7015
R 2: 0.6986
R 1: 0.6966
CURRENT: 0.6942
S 1: 0.6490
S 2: 0.6453
S 3: 0.6294
EURJPY
R 3: 128.44
R 2: 126.24
R 1: 125.10
CURRENT: 124.82
S 1: 121.67
S 2: 117.54
S 3: 115.90
USDSGD
R 3: 1.5011
R 2: 1.4972
R 1: 1.4777
CURRENT: 1.4577
S 1: 1.4530
S 2: 1.4406
S 3: 1.4182
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Market Brief |
The Usd was significantly weaker in the Asian session, as the FOMC cut rates by 75bp to 0.25% in yesterday's meeting. The Eurusd traded up to 1.4193 from 1.3802, while the UsdJpy broke the 90 support, on its way to 88.24 session lows. In the FOMC accompanying statement, members stated that they were committed to holding interest rates at "exceptionally low levels" for "some time." However, they did not mention "quantitative easing" in this aggressive statement as speculated by market participants. Yesterday, Wall Street session closed higher and Asian stock indexes are currently trading higher. The bearish sentiment surrounding the greenback doesn't seem to be subsiding and we don't anticipate and schedule events which will alter the current course.
The Bank of England's minutes for its rate decision, where members cut 100bps, will be released this morning. We expect (and market) an unanimous decision, as risks to the UK economic growth and deflationary concerns have increased.
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US Session: Dollar Slammed Following FOMC Rate Announcement
December 17, 2008 2:25 AM CET
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G10 Advancers and Decliners vs USD |
| | Sek | 0.59 | | | | Eur | 0.42 | | | | Nok | 0.36 | | | | Chf | 0.34 | | | | Dkk | 0.29 | | | | Gbp | 0.08 | | | Jpy | -0.02 | | | Nzd | -0.08 | | | Aud | -0.26 | | | Cad | -0.28 | |
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Global Indexes |
Current Level |
% Change |
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| DJIA futures | 8,894.00 | - 0.22 | | S&P future | 913.60 | + 4.63 | | Nasdaq futures | 1,239.00 | + 3.81 | | FTSE futures | 4,310.50 | + 0.85 | | CAC futures | 3,252.50 | + 2.02 | | DAX futures | 4,720.50 | + 1.15 | | SMI Futures | 5,580.00 | + 1.07 |
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World Markets |
Current Level |
% Change |
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| Crude wti | 44.18 | + 1.33 | | Gold | 851.65 | - 0.75 | | Silver | 11.18 | - 0.45 | | USD Index | 80.16 | - 0.65 | | VIX | 52.37 | - 7.73 |
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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: 0.7015
R 2: 0.6986
R 1: 0.6801
CURRENT: 0.6684
S 1: 0.6490
S 2: 0.6453
S 3: 0.6294
EURJPY
R 3: 128.44
R 2: 126.24
R 1: 124.63
CURRENT: 123.34
S 1: 121.67
S 2: 117.54
S 3: 115.90
USDSGD
R 3: 1.5011
R 2: 1.4972
R 1: 1.4777
CURRENT: 1.4754
S 1: 1.4682
S 2: 1.4647
S 3: 1.4579
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Market Brief |
Prices in the FX market continue to experience a strong correction putting a cease to the recent trend of dollar strength. The EurUsd surged over 350pips to the mid range of 1.40, while the UsdJpy dropped 170pips to the high 88 price area. The GbpUsd rallied 260pips to the high 1.55 level, following the trend of dollar selling. Equity markets were positive in the US and Europe, with the Dow up 4.2% or 359pts and the SPX back above 900 on a 5% gain. Interest rates remain the cornerstone of the market with the squeeze in treasuries pushing yields to historical lows. The capital inflow is likely to slowdown inferring that the bubble in treasuries may burst if investors begin to regain confidence in riskier assets. Commodities were mixed with oil marginally lower at $44.22bbl, while gold advanced 2% to $854oz.
Despite deteriorating economic conditions in Eurozone, Traders drove the Euro substantially higher. German PMI fell to its lowest level on record at 33.5 vs. 34.6. Growth projections have been revised to the downside, particularly employment and GDP expectations. In the UK, the BoE minutes are set to be released tomorrow and it is likely to reflect a unanimous vote to cut rates 100bps last meeting. The stance by the central banks regarding monetary policy illustrates the extent by which they are willing go in an effort to salvage the global economy.
Price trends in the FX market acted as a strong indicator of risk appetite among Traders and today’s movements were fueled further by today’s rate decision. A break in correlation between equities, FX, and commodities at the latter end of the week, signaling the market was shaping up for a major correction. The Usd traded at its lowest levels in two months against the Euro, and the Fed decision to cut rates 75bps to 0.25% accelerated the frequency of selling. We may see a prolonged period of devaluation in the dollar, if investors reallocate funds out of Usd denominated assets. The Fed’s aggressive rate cut, invigorated the financial markets and provided investors with a level of reassurance that the central bank will go to great lengths to move towards a recovery.
Risk Disclaimer:
Although every investment involves some degree of risk, the risk of loss in trading off‐exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make an informed decision prior to investing. The material presented here is not to be construed as trading advice or strategy. ACMUSA makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change.
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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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