Wednesday, October 29, 2008

Historic Relief Rally Brings Hope

Historic Relief Rally Brings Hope

U.S. Dollar Trading (USD) gave up gains against all except the yen as worlds stocks surged on bargain hunting. CB Consumer Confidence Plummeted but that was ignored as the rally that began in Asia spread to the Europe and then the US. Expectations of a Fed Rate Cut were combined with news that the Bank of Japan might also cut rates. In the U.S. share markets, the NASDAQ was up 143 points (9.53%) and the Dow Jones was up 899 points (10.88%). Crude Oil closed down -$0.49 ending the New York session at $62.73 per barrel. Looking ahead, September Durable Good Orders are expected at -1.5% vs. -3.3% previously. Also released the FOMC statement widely expected to contain a 0.5% rate cut.

The Euro (EUR) capitalized on surging stocks by breaking the key 1.25 level and consolidating. The late Dow surge induced the run up to resistance at 1.2800 in early Asia. GFK German Consumer Sentiment unexpectedly jumped to 1.9 vs. 1.5 expected and the German Stock market surged 11%. Overall the EUR/USD traded with a low of 1.2331 and a high of 1.2791 before closing the day at 1.2520 in the New York session.

The Japanese Yen (JPY) sold from the start to the finish of that day losing a record against multiple currencies on a combination of negative Yen factors. Threats and possible intervention in the Yen by the Bank of Japan was supported by a large rally in the Nikkei. Overall the USDJPY traded with a low of 92.66 and a high of 99.70 before closing the day around 98.20 in the New York session. Looking ahead, September Industrial Output is expected at 0.5% vs. -3.5% previously.

The Sterling (GBP) was a major from the equity rebound, climbing rapidly off lows. A possible bottom maybe in place given the rejection at 1.5280 twice and subsequent sharp rally. A break above 1.6000 early Asia is seen as a major bull test. CBI Sales in October we better than expected remaining unchanged at -27. Overall the GDP/USD traded with a low of 1.5405 and a high of 1.6060 before closing the day at 1.6020 in the New York session. Looking ahead, September Mortgage Approvals are seen unchanged at 32K.

The Australian Dollar (AUD) after holding the 0.6000 level with RBA intervention seen for a third day, the subsequent rally in the Nikkei and Global stocks sent the risk averse currency straight up. Resistance at .6240 gave way and subsequent surged through to test the major resistance at 0.6500. AUD/JPY was the biggest gainer of the day up well over 10%. Overall the AUD/USD traded with a low of 0.6030 and a high of 0.66529 before closing the US session at 0.6490.

Gold (XAU) continued to make gains as investors sold the USD and searched for safe investments. Trading continues to be volatile though and downside was tested in Asia. Overall trading with a low of USD$726 and high of USD$755 before ending the New York session at USD$748 an ounce.

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