Monday December 1, 2008 - 20:34:55 GMT
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FX Blog- GVI Forex Analysis Thread: December 2, 2008
GVI Forex Analysis Thread: December 2, 2008
Pre-Far East Open
- Weakness in equities Monday has dominated trade in all the financial markets. Some indicated that the early part of December is notorious for tax loss selling, and that 2008 has seen substantial losses, so there is plenty of potential selling to be done. Someone also noted that it recently has been working to sell equities in the first half of the month and to buy before month end. Traders tend to repeat what has been working. The markets also might be setting up for a poor employment report on Friday.
- The first week of December is an active one for the central banks. Inrerest rate cuts are expected just about across the board. Early Tuesday the RBA is expected to cut its cash rate target by -50 to -100bps (currently 5.25%. The Bank of Japan also scheduled an emergency meeting for tomorrow. It will announce that additional corporate liquidity will be made available to the banking system. Interest rates are already virtually at zero (0.30%). Japan is is discussing tax changes that could encourage capital repatriations by corporations.
- Monday saw a slew of record-low PMI manufacturing data releases from Europe. The U.S. ISM manufacturing PMI was very weak as well.
- Bourses in the Far East closed mixed to lower. European exchanges closed weak. The call for the close of U.S. exchanges is for sharply lower.
- The 2-yr U.S. minus E-Z spread is -125 bps -6 bps. U.S. bond prices are higher. E-Z bond prices have advanced as well.
- The USD is higher vs. the EUR, CHF and GBP from late Friday. The GBP has tumbled. The JPY advanced on risk aversion. The volatile commodity currencies (AUD and NZD) are trading weaker. The CAD has gained. Oil is softer and through the pivotal $50 line. OPEC decided to hold production steady but discussed an explicit $75 a barrel target price for oil. Gold is easier. See the GVI calendar for an updated schedule of data releases in the two weeks ahead.
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