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FX Update: Asian Summary

Posted:17/11/2008 7:16 by Peter Burnside
The USD gapped higher at the open against all the major currencies on renewed risk aversion after the G20 failed to offer any tangible solutions to the current credit crisis. EUR/USD gapped from NY closing levels around 1.2700 to 1.2560, with other currencies similarly following suit. As is the usual case, the USD slumped against the JPY on risk aversion, with USD/JPY opening at 96.54 in Asia, well down from NY closing levels around 97.20. Price action was then dictated by the Nikkei moves, similar to what dominated directional influence on currencies last week as well. The Nikkei fell at the open in reaction to US market losses Friday and the negative Japan GDP result which now has Japan officially in recession. However, the Nikkei bounced back which traders suspected was tied into "official" influence, and the Nikkei gained 3% by midday taking EUR/USD to highs of 1.2597 and USD/JPY to highs of 97.55. The Nikkei pared gains to less than 1% however after Fitch put Toyota's "AAA" on rating watch negative. Treasury yields which eased a little during the morning, bounced with the Nikkei and as a result were little changed to NY levels. Asian stocks were mixed with the surprise rally in the Nikkei but Australian stocks down sharply on resource concerns as commodity demand drops. Oil fell under $56 after Opec stated it was unlikely to be able to cut production. The dollar remains strong despite fears that the plethora of US data this week will be very negative and will reflect the dire US economic situation. click here to return to the top of the page
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