Tuesday September 30, 2008 - 19:22:28 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (30 September 2008)
The euro fell sharply vis-√†-vis the U.S.
dollar today as the single currency
tested bids around the US$ 1.4010 level and was capped around the $1.4430
level. Strong gains in U.S. equity
markets pushed the common currency lower.
U.S. legislators have
yet to agree on a final bailout package for troubled U.S. financial institutions and
many traders continue to believe a US$ 700 billion deal will be reached by
Thursday. President Bush said the
economy is at a ‚Äúcritical moment‚ÄĚ and needs the legislation passed. U.S. interbank lending rates remain
significantly elevated as the federal funds rate opened at 7.0% today, well
above the Fed‚Äôs current 2.0% target rate. Similarly, the Libor rate on
overnight U.S. dollar funds escalated a record 430 bps to 6.87%, the highest
level in 7.5 years. Data released in the
today saw the July S&P Case-Shiller home price index off a record 16.3%
y/y. Also, September consumer confidence improved to 59.8 and Kansas City Fed
President Hoenig hawkishly said rates should be normalized as soon as it is
feasible. In eurozone news, the French government took a 25% stake in Dexia
following a capital injection of ‚ā¨6.4 billion.
Financial institutions in the U.K.,
Belgium, U.S., Russia,
have all been rescued by authorities this week.
Most dealers believe the European Central Bank will keep interest rates
unchanged on Thursday and acknowledge greater downside risks to economic
growth. Data released in the eurozone today saw EMU-15 September flash consumer
price inflation fall to 3.6% from 3.8% in August. August French producer prices fell sharply
jobless fell 29,000 m/m. Also, German August real wholesale sales were up 0.5%
m/m. Euro bids are cited around the US$
The yen depreciated
vis-√†-vis the U.S. dollar today as the greenback tested bids around the
¬•103.50 level and was capped around the ¬•106.15 level. Traders are discounting about a 30% chance
Bank of Japan will reduce the overnight call rate by 25bps from the current
0.50% rate by early 2009, according to swap contracts. Implied dollar/ yen volatility reached 19.1%
today, its highest level since mid-March.
Data released in Japan
overnight saw August housing starts climb 53.6% y/y while the August jobless
rate reached a two-year high at 4.2%.
Also, August industrial output was off 3.5% m/m and August all-household
spending declined 4.0% y/y. Moreover,
September manufacturing PMI fell to a 6.5 year low. Prime Minister Aso pledged to protect Japan‚Äôs
economic and financial systems today.
Bank of Japan injected US$ 19.23 billion in yen in the money markets
overnight. Today‚Äôs is Japan‚Äôs
fiscal half-year end. The Nikkei 225
stock index lost 4.12% today to close at ¬•11,259.86. U.S. dollar bids are cited around the ¬•102.45
level. The euro moved lower vis-√†-vis the yen as the single currency
tested bids around the ¬•148.55 level and was capped around the ¬•151.35
level. The British pound moved higher vis-√†-vis the yen as sterling tested
offers around the ¬•191.00 level while the
Swiss franc came off vis-√†-vis the yen and tested bids around the ¬•94.30
The British pound fell sharply
vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.7755
level and was capped around the $1.8115 level.
Data released in the U.K.
today saw final Q2 GDP growth upwardly revised to 1.5% from 1.4%. Bank of England continued to provide
liquidity to the U.K.
banking system. Cable bids are cited
around the $1.7730/ 1.7420 levels. The euro came off vis-√†-vis the British
pound as the single currency tested bids around the US$ 0.7840 level and was
capped around the $0.7995 level.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."