Daily Forex Snapshots

Late US Session-Usd Recovers on Talks Lehman will be Purchased, Oil Drops.

August 22, 2008 11:36 PM CEST

G10 Advancers and Decliners vs USD

	Nzd	1.69
	Aud	1.63
	Jpy	1.51
	Chf	1.16
	Nok	0.89
	Dkk	0.71
	Sek	0.70
	Cad	0.38
	Eur	-0.71
	Gbp	-1.36

Global Indexes

Current Level

% Change

DJIA Index	11,617.00	+ 1.83
S&P 500 Index	1,292.20	+ 1.31
NASDAQ 100 Index	1,929.50	+ 1.17
FTSE 100 Index	5,514.00	+ 2.45
CAC 40 Index	4,406.00	+ 2.20
SMI Index	7,109.00	+ 1.46
DAX Index	6,362.50	+ 1.65

World Markets

Current Level

% Change

Crude wti	114.63	- 5.41
Gold	823.05	- 1.67
Silver	13.36	- 3.50
USD Index	76.81	+ 0.80
VIX	18.81	- 5.10

Todays Calender

Estimates

Country / GMT

No Major Events Scheduled

Currency Tech

AUDUSD
R 3: 0.8846
R 2: 0.8797
R 1: 0.8757
CURRENT: 0.8735
S 1: 0.8626
S 2: 0.8593
S 3: 0.8503

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 162.39
CURRENT: 162.07
S 1: 160.88
S 2: 160.14
S 3: 158.61

USDSGD
R 3: 1.4265
R 2: 1.4219
R 1: 1.4201
CURRENT: 1.4082
S 1: 1.4025
S 2: 1.3891
S 3: 1.3819

Market Brief

The Usd regained momentum in today’s trading session, based on weak economic data out of Europe as well as major news in the financial sector. The EurUsd fell over 120 pips to the high 1.47 level, while the UsdJpy rose sharply the low 110 price. The GbpUsd declined substantially trading with a 1.85 handle, mostly due to the GDP figure which was released today. Equity markets rallied strong in the US and Europe, after a week of losses stemming from higher oil prices. Commodities declined across the board with oil leading the way down 6% from yesterday’s close at 114, in addition, gold fell 5% to 827. Bond yields were higher by 11bps on the 2yr treasury, which is signaled a strong increase in risk appetite from the bearish sentiment Traders have held since the early part of the week.

UK GDP was flat at 0.0% vs. the 0.1% exp. teetering on a negative reading may suggest that the economy is heading for a recession. If so, investors should expect to see additional losses in the cable as the central bank will have to lower rates to generate growth. Several other data points came in negative and lower than estimates, particularly exports which were released at -0.5% vs. 0.4%. We maintain our bearish outlook, with trading range between 1.86-1.82 in the near-term. In the Eurozone, industrial new orders came in better than expected at -0.3% vs. the consensus figure of -1.1%. . While the data beat expectations, both the actual and projected figures were negative, which serves as insight to how dismal the economic outlook is for the region. Our desks expects the EurUsd to extend its recent decline to levels closer to 1.40 by year-end, largely due in part to the contraction in growth most of the region is likely to experience.

The market was submerged with a new sense of optimism regarding the timeline the US will need to recover from the recent downturn. Korea Development Bank is in talks to purchase Lehman Brothers, which provided investors with major relief regarding the state financial institutions in the US. Shares in Lehman Brothers surged on the news, as this transaction shows there are still buyers who see relative value in some of the ailing banks. This also removes pressure from the Fed, as they are closely monitoring Freddie and Fannie for the possibility of the banks to fail. These factors contribute to the probability in which the Fed will raise rates next meeting. Bernanke spoke at a forum in Jackson Hole, WY, in which he addressed both his concerns growth and dollar strength. The FOMC is scheduled next week, and we may be able to extract more information as to what the central bank’s outlook is for the US economy.

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Asian Session - Crude's Surge Hurts Usd

August 22, 2008 12:08 PM CEST

G10 Advancers and Decliners vs USD

	CAD	-0.12
	EUR	-0.27
	NOK	-0.28
	DKK	-0.28
	SEK	-0.29
	CHF	-0.53
	AUD	-0.57
	NZD	-0.71
	JPY	-0.79
	GBP	-0.94

Global Indexes

Current Level

% Change

Nikkei 225 Index	12,666.04	- 0.67
Hang Seng Index	20,392.06	- 2.57
Shanghai Index	2,405.23	- 1.08
FTSE 100 Index	5,426.10	+ 1.04
CAC 40 Index	4,331.02	+ 0.61
SMI Index	7,013.24	+ 0.18
DJIA futures	11,426.00	+ 0.15

World Markets

Current Level

% Change

Gold	829.99	- 0.83
Silver	13.68	- 1.22
VIX	19.82	- 2.93
Crude wti	120.66	- 0.43
USD Index	76.47	+ 0.35

Todays Calender

Estimates

Country / GMT

GDP - second estimate	0.1 (1.5)	0.2 (1.6)	UK / 8.30
Industrial orders, % m/m	-3.5 ,-1.0	-1.1 ,-6.2	EZ / 9.00

Currency Tech

Market Brief

The Usd continued to decline in the Asian session as worries over the US financial markets and surging crude prices weighed on the Dollar sentiment. The EurUsd climbed to the 1.4900 levels, before retracing slightly to 1.4876, while the UsdJpy declined and is now trading at 108.90. Crude rose across the board, with wti moving up $5.00, above $120.00bll. With concerns of a production cut swirling around the September 9th OPECʼs meeting and Wednesday’s inventories lower than expected still lingering, crude has picked up a bullish tone. And given the high level of the Usd this commodity will be the prime driver in currency pricing today. In addition, 5-year swap spreads are now hoving around 100bp, the widest level since the Bear Stern disaster and before that you would have to go to 2001 and the equity market collapse to find spreads this wide. A gloomy sign if ever was one. Outside Bernanke’s scheduled speech in Wyoming (given the uncertainty surrounding the financial market, traders will be on a heightened state of alert) the market will be without any real events or data releases, so traders should be particularly aware of price-action in other assets classes.

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