Thursday October 30, 2008 - 18:37:42 GMT
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FX Blog- USD Trading Outlook: Far East Open for October 31, 2008
USD Trading Outlook: Far East Open for October 31, 2008
- The immediate focus now is the expected BOJ -25bp rate cut on Friday to 0.25%. This move was signaled in the Nikkei News late Tuesday. The BOJ is well known for consensus building before its policy moves.
- Monthend volatility is expected to continue through Friday. Fed decision yesterday to cut by 50bps should not have been a factor, nor its gloomy economic view as both were as expected.
- The Fed provided 120bln in swap lines to four emerging market nations (USD 30bln apiece). The total amount of USD liquidity that has been injected into global markets is staggering. At some point these massive injections could weigh on the unit.
- The USD remains closely tied to the performance of share markets. Better equity prices are usually seen as a USD and JPY negative. The Nikkei spiked higher by over 10% today after Tokyo announced a major new economic stimulus package. European bourses closed mostly higher. U.S. bourses currently are seen closing higher.
- The 2-yr U.S. minus E-Z bond spread is -91 bps +4 bps. U.S. bond prices are weaker. Prices on E-Z bonds closed up.
- The USD was last down vs. the EUR and GBP. The CHF and JPY are softer. USD/CAD is sharply weaker. Friday sees a very active clandar. See the GVI calendar for an updated schedule of data releases in the two weeks ahead.
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