Forex Daily Analysis - 18/09/2008: government steps taken to restore confidence
The USD continued lower across the board today after equities failed to respond positively to government steps taken to restore confidence; DJIA was down over 300 points at mid-day and remained deeply in the red into the final hour of forex trading today. US housing data continued to show weakness in the housing sector but traders were unconvinced that the slightly lower numbers indicate a potential bottoming in the troubled housing markets. Finding stops on a breakout higher, GBP and EURO rallied to new daily and weekly highs as the USD wilted further during New York trade; GBP high print at 1.8245 dragging EURO higher for a high print at 1.4385 before selling from longs capped the move into the afternoon. Traders note that volumes improved during the day and order-flow was considered orderly. USD/JPY remained inside existing weekly ranges but managed a low print at 104.36 before recovering slightly to trade the 105.00 handle late; traders note cross-spreading was the main driver of volatility during the day today. Swissy extended weekly losses to a 1.0992 low print before bouncing slightly as the technical picture suggested an objective from the highs may have been reached; traders note that the rate has likely been pressured from the advance in Gold. Oil prices advanced today as well which likely supported the EURO and pressured equities but the market is still below the psychological point of $100/BBL at $97.00; traders note that higher prices will likely support EURO through the end of the week. The one higher performer on the board was USD/CAD scoring a 108.11 high print before reversing hard to fall back under the 107.00 handle to close lower on the day; traders note the rate had aggressive selling into the highs by large names. In my view, today’s USD action significantly underscores the fundamental weakness of the USD despite the recent euphoric rally. Traders note that volatility has been very high and the majors continue to respond with higher action suggesting that the dips will continue to be bought near-term. Look for the USD t0 continue lower overnight and through the end of the week. Tomorrows US data is the last for the week so expect Friday to be volatile as traders will likely cover open trades to end the week.
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09-18-2008, 03:27 AM
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