Wednesday May 21, 2008 - 20:13:34 GMT
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FX Blog- Market Snapshot Far East Open for 22 May 2008
GVI Market Snapshot- Far East Open for May 22, 2008
How Key Market Prices are Performing:
Forex and Commodities:
- The USD traded sharply lower again vs. the EUR on Wednesday. On the other hand, the GBP is about steady from late Tuesday. The EUR/GBP cross is higher.
- The carry trade financing currencies, JPY and CHF, are stronger vs. the USD. The CHF is higher vs. the JPY. As for the EUR crosses against the carry trade funding currencies, EUR/JPY has gained, but The EUR/CHF has eased.
- The carry-trade driven currencies (AUD, CAD and NZD) are broadly higher vs. the USD. Gold and oil have continued to press higher. Weekly crude oil inventories unexpectedly fell sharply.
Equities and Bonds:
- The Shanghai Composite rebounded on Wednesday, while the Hang Seng gained. In Japan, the Japanese Nikkei closed lower. 10-yr JGBs ended at 1.620%, +0.5bps.
- Key European bourses mostly ended lower. Eurozone benchmark bond prices have fallen.
- U.S. equities are closing lower. U.S. bond prices are weaker.
- The Fed meeting minutes were taken as negative by the USD and the markets, with the central bank revising down its growth forecast and fretting about mounting inflationary pressures.
- Earlier, an unexpected gain in the headline German IFO survey gave the EUR a lift today. The market response proves once again that Germany=Euroland in the minds of forex traders. There have been complaints about this bias of the ECB.
- There were indications again that Asian central banks were diversifying USD reserves into EUR. If true, this is a logical explanation for what appeared to have been illogical market behavior. Presumably, with the USD now lower, interest to unload USD will start to abate. The tone of the USD has turned negative from neutral.
- Thursday will see U.K. retail sales and CBI Industrial trends. The Eurozone will release new industrial orders. Weekly U.S. jobless claims are due as well. Looking ahead, next Monday will be major holidays in the U.S. and London.
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