Forex Reactions- Bailout Fever Overcome

The automakers' bailout proposal was rejected in Senate, by 53-45, falling to reach the needed 60 votes level. This comes after earlier in the day, sources have said republicans and democrats were closed to reach a deal. However the two leading parties failed to achieve an agreement over the labor market's payment in the industry.

This was the second attempt of the three car-makers to access funds from the Government in the last few weeks. Both attempts were rejected, as GM and Chrysler will run out of cash shortly. It looks like the next date when the car-industry can show in face of the Congress again is January, if they don't call bankruptcy by then.

The news sent a strong shockwave throughout the financial markets. The equity markets were the most affected by the decision to reject the bailout plan. The Nikkei tumbled 484.68 points (5.56%), while the S&P futures fell as much as 46.00 points. Futures in Europe are pointing to a negative opening, having the Dax already down by 201.50 points (4.23%).

In the currency market, the yen (Usd/Yen) fell down as much as 300 pips, to 88.30, the lowest point the pair had touched in the last 13 years. The euro is now trading 100 pips under the Asian open, despite that earlier the pair was testing the 1.34 area. The aussie was also strongly affected by the news report, falling 180 pips in just a few minutes

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