Monday November 10, 2008 - 18:08:51 GMT
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FX Blog- GVI Forex: Far East Open for November 11, 2008
GVI Forex Analysis Thread: November 11, 2008 :
Far East Open
- A mid-week partial holiday in the U.S. tends to be very disruptive to trading. U.S. bond markets are closing shortly, but equity trading will continue. Fed holidays tend to shut down the interbank forex market because of required cash settlement of transactions cannot take place.
- News overnight that China announced a nearly USD 600bln domestic economic stimulus program was a major development. The announcement gave Far East bourses a lift. It smells like pre-emptive action ahead of the G20 this Saturday.
- In the U.S., the government made the terms of the AIG bailout less onerous and made more funds available. Both developments take a bit more financial risk off the table. Like Lehman, AIG is too big to fail.
- European bourses ended higher in the wake of the news, while U.S. bourses are seen closing lowr later. U.S. treasury markets will close Tuesday Veteranâ€™s Day holiday. U.S. stock markets will be operational.
- The 2-yr U.S. minus E-Z spread is -112 bps -5 bps. U.S. bond prices are higher. E-Z bond prices have gained as well.
- The USD is now steady vs. the EUR and CHF. The GBP is softer. The JPY is now stronger on lower stock prices. The AUD, CAD and NZD are higher after the China news. Gold is up and oil is down modestly. See the GVI calendar for an updated schedule of data releases in the two weeks ahead.
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