Tuesday October 28, 2008 - 18:40:43 GMT
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FX Blog- USD Trading Outlook: Far East Open for October 29, 2008
USD Trading Outlook: Far East Open for October 29, 2008
- All the markets remain closely tied to the performance of U.S. share markets. Tuesday was certainly a unique session with a squeeze on VW shorts in Germany driving its price and the DAX up sharply.
- Also, Asian bourses have gained and European exchanges ended mostly higher, setting the stage for a positive session in the U.S.
- Strong U.S. shares weighed on bond prices. Prices on E-Z bonds surprisingly gained.
- In defense of the krone, the Icelandic Central Bank raised it interest rate target by 600 bps to 18.00%.
- The USD is up vs. the EUR, GBP, CHF and JPY. The gain vs. the JPY is significant in that it could be signaling an easing of carry trade repatriations. Also, Nikkei News ran a story that seemed to signal a -25bp cut in interest rates by the Bank of Japan on Friday to a target rate of 0.25%.
- As for the Fed decision Wednesday, many on the street are calling for a -50bp rate cut. We lean in the direction of a token ease of only -25bps, as there is no compelling reason for the central bank to use most of its few remaining bullets.
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