Friday October 31, 2008 - 09:45:47 GMT
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FX Blog- USD Trading Outlook: New York Open for October 31, 2008
USD Trading Outlook: New York Open for October 31, 2008 :
- The BOJ cut rates as expected earlier today, but made the mistake of not making a unanimous vote on the policy move, and cutting by only -20bps to 0.30%. The deision was seen as a tepid one and the Nikkei fell by 5% and the JPY spiked higher. A better decision might have been to do nothing.
- Most will be happy to see October draw to a close today. Market volatility is expected to continue through today. The early call for the open of U.S. bourses is for lower.
- Asian bourses closed mostly lower and key European equity indices are mostly weaker at this hour. There is plenty to worry about in Europe with IG Metal threatening to strike and German retail sales weak.
- The USD remains closely tied to the performance of share markets. Falling equity prices are usually seen as a USD and JPY positive â€“ risk aversion. The 2-yr U.S. minus E-Z bond spread is -89 bps +2 bps. U.S. bond prices are higher. Prices on E-Z bonds are up.
- The USD is up vs. the EUR, CHF and GBP. The JPY is stronger. The AUD and NZD are sharply weaker. Today sees an active U.S. data calendar. See the GVI calendar for an updated schedule of data releases in the two weeks ahead.
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