Investors vowing not to make the mistake of betting for a second time on a passing vote for the bailout bill have traded stock markets down around the globe including a close of -348.22 points on the US DJIA. Economic fears aren’t only being brought on by uncertainty about the bailout plan, though. Concern of a possible global recession is spreading due to rising unemployment claims in the US, sagging factory orders in the UK, and slowing growth in Euro-zone even turning the ultra hawkish ECB into doves. With such poor data releases becoming a daily occurrence and virtually all sectors slowing globally, the effect of the bailout even if it does get passed has traders’ pessimism on the rise.

So, with yet another exciting fundamental news day including the Non-Farm Employment Change, ISM PMI, Euro credit crisis summit, and of course the bailout vote all set to hit the wires, we look to stay flat and await an indicator for next week’s direction.

EURUSD – Having fallen past significant support, the EURUSD has stalled out in anticipation of the bailout vote. We expect most pairs to gain against the Dollar on a yes vote on the bailout bill, but with Euro revaluation this week bringing the EURUSD down over 800 points and a central bank that could be forced to cut interest rates soon, the Euro is primed for even more losses.

USDJPY – The carry trade could come alive temporarily with a yes vote and a string of positive days following in the US. However, the fundamental outlook for more losses has and most likely will not change even if the bailout bill is passed. We will look to sell rallies next week on Yen-quoted pairs.

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John Rowa
Executive Director of Trading
+1 951 823 0686 - Tel
+1 951 823 0687 - Fax
JRowa@IntegrityFXllc.com
www.IntegrityFXLLC.com