Automated Trader NTKN items search results for pair trading

Russia's Medvedev: Intl Cooperation Needed on Financial Crisis

Russian President Dmitry Medvedev called for "urgent joint action" to tackle the financial market crisis.Â Russian stock markets have plummeted in recent days, sparking numerous halts in trading to slow down the decline.

FX Update: European Outlook

The RBA's mammoth 100bp rate cut -- its biggest since 1992 -- has set a precedent and boosted speculation for a coordinated round of global rate cuts to counter recessionary winds. That saw Australian stocks rally and Asian markets pare losses. Commodities, which fell limit down in Shanghai trading, managed to find a footing. In the FX world, the relaxation in risk aversion saw the USD, JPY and CHF give back some of their recent gains versus the AUD and the main European currencies, though lower global rates are likely to ultimately benefit the US currency more. As Fed members Bullard, Fisher and Evans implied on Monday, the US monetary policy cycle is already at its outer limits in terms of effectiveness (real rates are negative). Focus will remain on the unfolding crisis, and currency moves are likely to reflect the ebb and flow of risk aversion. European data today are likely to reflect the weakening economic picture, which can only get worse with money markets remaining near frozen, while a Bernanke speech and Sep-16 FOMC minutes highlight the US calendar.

FX Update: Euro Under Pressure

EUR/USD came back under pressure after starting the European session close to 1.3600. Eastern European names were good early buyers, but the pair struggled to overcome large standing orders from French and German accounts, which encouraged a move back in to 1.3565. The decisive RBA move overnight increased speculation of a coordinated policy move, but the ECB appear to be no closer to a move if ECB's Trichet is anything to go by. Trichet focused on liquidity in comments after yesterday's Ecofin meeting, confirming that the Bank will provide all the liquidity that is needed. Some would argue that we are indeed experiencing a liquidity crisis, but there are growing concerns over the impact on the real economy in the wake of the spiralling financial crisis. In this respect, ECB's perceived intransigence could increase EUR/USD's downside risk, with repatriation from US and Japanese names continuing, while a broadly negative outlook for the eurozone is also expected to undermine any potential recovery. Yesterday's 1.3445 trend low and the 200-day moving average at 1.3380 are potential targets.

FX Update: Cable Steady

Cable held steady close to 1.7500 versus overnight lows of 1.7408 amid reports of Asian reserve management demand from early European trade. Meanwhile, GBP/JPY and GBP/CHF are also relatively stable, trading close to 180.00 and 2.0000 respectively. RBA's aggressive 1% rate cut overnight has predictably fueled coordinated rate cut speculation, although the individual nuances of each national economy may argue for a less aggressive hand from the BOE. The Bank has already cut 75 bps and while the calls for 50 bp grow louder, most are still calling for a 25 bp move. The market will focus on August industrial production ahead, which will underline how rapidly the UK economy is cooling, which will keep rate cuts hopes at fever pitch ahead of Thursday's BOE MPC decision. Elsewhere, the UK Times said the Treasury may take a GBP 50 bln stake to shore up high street banks

FX Update: Yen Gains Amid Turmoil

JPY buying accelerated amid more banking sector fears. There was speculation of potential UK government funding in UK banks, while Iceland's Landsbanki went in to receivership and Italy's Unicredit came under more heavy selling amid speculation of balance sheet problems. Meanwhile, Deutsche Bank also fell 10% on talk of capital increase, but this was dismissed as nonsense by a financial source. The turmoil in the market saw USD/JPY fall from 103.00 down to 101.48, while EUR/JPY retreated to 137.27 lows and GBP/JPY moved back in to 176.50 from levels above 180.00. JPY should remain supported in the near-term, with flight to quality trading and general unwinding of long standing carry trades expected to support. Japanese officials will not be happy over protracted JPY gains, but appear to accept that the market is going through a broad based restructuring of long-term risk/leverage.

FX: Flight To Quality Supports Swissy

CHF remained supported by global risk aversion, with EUR-CHF trading on a heavy footing underneath the 1.5500 handle, although it has held up since it rebounded from Monday's 1.5377 lows. Meanwhile, USD-CHF is trading ahead of 1.1400, with the dollar benefiting on selling interest via the European majors, although it trades below the 1.1485 highs seen in Asia and in Monday's session. The CHF should benefit from further unwinding of leverage positions, although hopes for a coordinated round of rate cuts has tempered fresh gains.

FX: Cable Faces Pressure; Other Euro Units Off Lows

The European market continued to focus on the dire state of the European banking sector, which left the European majors on a heavy footing, although with the exception of Cable most currencies remained above Monday's lows. Cable came under increased pressure amid speculation that three leading U.K. banks had asked for assistance from the U.K. authorities, although this was later denied. Cable hit new trend lows of 1.7322 before it rebounded above 1.7400 on short covering. EUR-USD traded under the 1.3600 handle, but found support ahead of 1.3500 and consolidated close to 1.3580 ahead of the N.Y. open. Elsewhere, JPY traded on a firm footing, with the theme of global deleveraging continuing to support. Elsewhere, AUD-USD maintained a supportive tone after it found good buyers ahead of 0.7100 in early European trade, leaving the pair close to 0.7200

Markets Report

European indices shook off early losses to trade higher amid reports major UK banks may ask the government to buy stakes in an attempt to shore up liquidity. The FTSEurofirst gained 0.8%. The FTSE 100 future rose 0.6%. The DAX future added 1.3%. The CAC future was up 1%. UK banks fell sharply, with RBS at one point off nearly 40% on a slew of reports that it, Lloyds, HBOS and Barclays are mulling stake sales to the UK government. Iceland took control of its second largest bank, and the country's currency hit new lows against the euro. Reports say Iceland took a EUR 4bln loan from Russia to shore up its cash position. Russia denied the report. VW skyrocketed 48% on reports Porsche will take a controlling stake in Europe's largest automaker by 26 November. Economic data was mixed. UK August industrial production dropped for the sixth straight month, the longest such run in 30 years. German August industrial orders rose 3.6% m-o-m, the first increase in nine months. Y-o-y orders plunged 7.6%. The UK banking crisis hammered sterling early in the session, and trading remained highly volatile. Cable was down 0.1% after falling to a 30mth low in intraday trading. EUR/GBP added 0.5%. GBP/JPY was was off 0.2%. EUR/USD added 0.5%. Bonds eased as equities returned to the green. The Bund future dropped 8 ticks to 117.09. The 10yr Bund yield rose 1bp to 3.77%. The 10yr Gilt yield was up 2bps to 4.24%. The 10yr JGB yield added 9bps to 1.47%. The 10yr T-note yield gained 4bps to 3.5%. Oil rallied on dollar declines and an unexpected 100bp cut by the RBA overnight. WTI was up 3.2% at $90.60 after a brief stint above $91. Brent added 2.4% to $85.77.

FX: AUD Drifts After RBA Rate Cut

AUD-USD drifted lower in to the N.Y. session to trade back in to 0.7125 after it lost support around the 0.7200 handle. Further unwinding of carry trade positions continued to weigh on Aussie, while macro account selling was also noted in the mix in response to the RBA's aggressive 1% rate cut. AUD-USD has fallen from early European highs of 0.7348 over the course of the European morning, after the pair posted a knee-jerk rally on the RBA move. The market cheered the RBA's decisiveness, although the narrowing in yield spreads and the negative economic outlook for Australia are hardly positives for the medium term. Risk is likely to remain on the downside, but a return to yesterday's 0.6995 low is likely to be more gradual as the market speculates on a coordinated policy response ahead of the G7 meeting, which starts on Friday.

US Opening Comments

US equities are following European stocks modestly higher, perhaps on optimism the FED will start buying commercial paper to unfreeze the $1.6trln funding market. Australia cut its benchmark rate by one percentage point, the biggest cut in 16 years, and central banks around the globe injected funds to bring borrowing rates down after they spiked higher overnight. Dow futures are up 0.5%, S&Ps are up nearly 1%, and Nasdaq futures are 1.4% higher. Bonds are firmly in negative territory with the 30yr down 0.4% and the 10yr down 0.6%. The short end has seen selling as well, with the 3-month bill yield up 11bps to 0.61%. The dollar is taking a hit â�� USD Index down 0.5% â�� as EUR and GBP recovered somewhat from yesterdayâ��s massive sell-off. EUR/USD is up 0.75% and Cable is up 0.2% as of this writing. JPY has pared gains from y/day with USD/JPY up 0.4%, EUR/JPY up over 1%, and GBP/JPY up 0.6%. The energy complex has also flipped after y/dayâ��s losses, with Crude up 3.3% in premarket trade. Unleaded is up 2.2% and Heating Oil is up 2.3%. Gold is trading up $15 at $881/oz. At 8:55am EDT, Johnson Redbook Retail Sales will be released. Minneapolis FED President Stern speaks about the repercussions of financial shocks in Illinois at 11am. FED Chairman Bernanke follows at 1:15pm with a speech on the economic outlook and financial markets. At 2pm, minutes from the FOMC meeting on September 16 are released. At 3pm, August Consumer Credit is expected to increase $5bln.