Daily Forex Snapshots

Late US Session-Dollar Rally Slows Down

August 18, 2008 9:49 PM CEST

G10 Advancers and Decliners vs USD

	Nzd	0.59
	Jpy	0.39
	Aud	0.23
	Nok	0.14
	Eur	0.06
	Dkk	0.05
	Sek	0.00
	Gbp	-0.06
	Chf	-0.08
	Cad	-0.38

Global Indexes

Current Level

% Change

DJIA Index	11,620.00	- 0.37
S&P 500 Index	1,292.50	- 0.55
NASDAQ 100 Index	1,951.00	- 0.74
FTSE 100 Index	5,460.00	+ 0.20
CAC 40 Index	4,469.50	+ 0.15
SMI Index	7,241.00	+ 0.03
DAX Index	6,466.00	- 0.16

World Markets

Current Level

% Change

Crude wti	114.82	+ 0.92
Gold	795.76	+ 1.02
Silver	13.18	+ 3.33
USD Index	77.01	- 0.22
VIX	20.60	+ 5.21

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R 3: 0.8952
R 2: 0.8845
R 1: 0.8797
CURRENT: 0.8750
S 1: 0.8652
S 2: 0.8593
S 3: 0.8504

EURJPY
R 3: 164.40
R 2: 163.88
R 1: 163.10
CURRENT: 162.52
S 1: 161.845
S 2: 161.39
S 3: 160.15

USDSGD
R 3: 1.4265
R 2: 1.4220
R 1: 1.4193
CURRENT: 1.4123
S 1: 1.4025
S 2: 1.3890
S 3: 1.3820

Market Brief

The Usd dropped slightly in the US session based on price volatility in the commodities sector. The EurUsd rose 34 pips to the low 1.47 level, while the UsdJpy fell 47 pips to 110 as the recent dollar rally is beginning to subside. The GbpUsd was mostly flat, holding ground at 1.86 as the economic picture in the UK remains weak. Equity markets dropped substantially in the US and marginally lower in Europe, with the Dow in particular lower by nearly 200pts. Losses in the equity markets are mostly due to negative news out of the financial sector with shares of Freddie Mac and Fannie Mae, as Fed bailout may become necessary to prevent the possibility of these institutions going into bankruptcy in the near-term. Commodities declined with the exception of gold which is higher than by nearly 13 at 800, while oil continues to toggle back and forth between 112 and 113. Bond markets indicate that investor optimism may be overdone, as yields have retracted across the curve, mostly in the 2yr treasury.

Trade balance in the Eurozone remained negative at -0.1b vs. 1.2B exp. Economists believe that the trade deficit reading is due in part to a decrease in trading with the US. In addition, the Bank of France announced a decline in the consumer sentiment index from 95 to 92. This is a clear indicator that consumers are feeling the pressure from the slowdown in growth in the Eurozone. The German Bundesbank stated that the weaker growth may not balance inflationary pressure, thus creating a difficult position for the ECB. In the UK, Rightmove House Prices fell from the prior reading of -1.8% to -2.3%, which is further evidence that the economic situation is likely to remain dire in that region. Look for the cable to stay rangebound between 1.85-1.87, as the currency price is realizing the severity of the financial state of the UK.

Traders are trying to ascertain risks in the US financial markets, as relative value is becoming increasingly difficult to find. With oil prices trading below $120bbl, the dollar was able to pose a strong rally across most of the G10, however investors should remain cautious of overly aggressive rate expectations. The Usd should remain stable as long as monetary policy projections remain balanced. We should be conscious of where the consensus of Analysts estimates fall closer to the FOMC meeting in September, we are maintain our view that the Fed will not be in a position to raise rates before 2009, thus keeping Usd appreciation constricted to a resistance level of 1.40.

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Asian Session - Quiet Open

August 18, 2008 11:53 AM CEST

G10 Advancers and Decliners vs USD

	AUD	0.86
	NZD	0.70
	NOK	0.64
	CAD	0.57
	EUR	0.56
	DKK	0.54
	GBP	0.49
	SEK	0.43
	CHF	0.38
	JPY	0.29

Global Indexes

Current Level

% Change

Nikkei 225 Index	13,165.45	+ 1.12
Hang Seng Index	20,760.98	- 1.88
Shanghai Index	2,320.43	- 5.31
FTSE futures	5,449.00	- 0.99
DAX futures	6,456.50	- 0.30
SMI Futures	7,239.00	+ 0.29
DJIA Index	11,629.00	- 0.29

World Markets

Current Level

% Change

Gold	803.15	+ 1.96
Silver	13.33	+ 4.50
VIX	19.58	- 3.73
Crude wti	115.27	+ 1.31
USD Index	76.80	- 0.49

Todays Calender

Estimates

Country / GMT

Trade balance (Jun)	--	-€1.5bn	EZ / 9.00
NAHB housing market index	16	16	US / 17.00
Output PPI, % q/q	2.1	1.8	NZ / 22.45

Currency Tech

Market Brief

The Usd was slightly weaker in the Asian session and start of the trading week. This week will have market participants pondering the swift unraveling of the global growth decoupling story and sharp correction in commodity prices. The massive surge in the Usd caught many analysts off guard, causing a broad recalculation of forecasts. However, most are now predicting a short term tempering of Usd buying. We should like to see how this weekʼs trading plays out, before expressing our short term bias. The EurUsd traded upward from 1.4649 to 1.4767, while UsdJpy fell slightly from 110.61 to 109.97 on light trading. The commodity bloc was able to gain some ground, with the NzdUsd moving sharply from 0.7040 to 0.7100 and AudUsd from 0.8654 to 0.8745. Crude is slightly higher trading at $115.11bll up 1.17% while gold is above the $800oz mark. The Asian regional indexes are following Wall Street mixed closed on Friday, with Shanghai down -4.61%. European futures are now pointing to a mixed opening.

With a relatively empty calendar today, the European session markets will be watching the EuroZone trade balance for signs of global weakness.

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