Currencies Analysis - 17/10/08: equities falling off again
It was another volatile day in the US markets today, equities falling off again then whipsawing higher, oil dropping to yearly lows, USD whipping around as well. US data was weak as expected today; some analysts called it “hopelessly bearish” for the US economy. All news today was considered bad for the long-term health of the US economy but sharply lower Philly Fed was probably the most devastating. Apparently the manufacturing sector believes we are in a recession already and won’t be out of it for quite some time; Philly Fed out today at -37.5 vs. +3.8 last month. Although all data was weak today the USD continued to focus on the financial crisis and equities; the USD rising or falling with equities today for the most part. Traders note that the Greenback is remaining two-way in late New York trade with little pushing trade at all; thin conditions are exaggerating minor moves and most of the majors are ignoring fundamentals anyway. GBP rallied in late trade while EURO held back; high prints for Cable at 1.7354 with the rate above the 1.7330 area into the close. EURO was unable to extend early strength; high prints at 1.3539 went unchallenged after the London fix and the rate pressed for lows later in the day. Low prints at 1.3345 went unchallenged but the rate did trade to the low 1.3400 handle in US trade making for whippy conditions again today. USD/JPY had low prints overnight at 99.24 before rallying and whipsawed traders today as equities rallied then fell then rallied suggesting that there isn’t a lot of rational activity in the Greenback lately. In my view, the USD is still trapped in existing ranges and that it will take something more than bad economic news to shake things loose. I think it is apparent that the USD is under duress with bad economic conditions and the longer the USD hold these artificial gains the faster the drop will be when it comes. Look for more two-way action and the majors to track equities. Don’t expect some pairs to make a lot of sense the next day or two; apparently some action is being driven by panic and fear as the financial crisis continues to drag on.
Analysis Provided by: Forexpros.com - Written by Jason Alan Jankovsky
Last edited by ForexAnalysis : 10-17-2008 at 05:57 AM.
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10-17-2008, 05:49 AM
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