Global Stocks Plunge as Panic Grips World's Financial Markets
Daily Forex Fundamentals |
Written by CMS Forex |
Oct 11 08 04:57 GMT |
Global Stocks Plunge as Panic Grips World's Financial Markets
Global Stocks Plunge
Following the fall in US stocks yesterday, the Japanese Nikkei Index fell almost 10% in its first hour of trading. It closed the day down 9.6%. The sell-off flowed into the European markets as the key London index was down 8.8% and the DJ Stoxx 600 showed European stocks closing more than 7%.
GBP/JPY - Pound SLides 1000 Pips From Yesterday's High to Today's Low at 166
The Pound-Yen pair continued its decent. From yesterday's high near 176 the pair sank all the way to 166, a 1,000 pip move in less than 24 hours. It did find support there and recovered to 172 after the NY open only to have it act as resistance and push the pair back down.
EUR/CHF - Euro Slides vs Fran on Risk Aversion
The Euro-Swiss Franc pair slid 370 pips overnight, accelerating its fall that had been more tempered during the middle of the week. The pair, which is a favorite for carry trade in European circles slid to support near 1.5075 as stocks fell overnight.
USD/JPY - Dollar To Finish the Week Around 500 Pips Lower vs Yen
In the first minutes following the NY open, the Dow industrials plunged nearly 700 points to trade below the 8,000 mark for the first time since April 1, 2003, though stocks bounced back in the following hour. After that however, stocks resumed their downfall, with the Dow index down almost 400 points by 1 PM EST. The Dollar-Yen pair fell 300 pips from yesterday's peak overnight, but traded higher in the NY session. The pair opened the week at 105 and by noon EST was down 550 pips, so the selling momentum in this pair seems to have faded after the Asian session.
US Trade Deficit Narrows on Fall in Oil Imports
In fundamental news, the US trade deficit shrank in August as both exports and imports fell. Imports were down as oil prices decreased, and there was less crude oil purchased amid a weakening economy. The trade deficit amounted to $59.14 billion, a 3.5% decrease from July's revised figure. With the its major trading partners slowing, the US saw exports decline by 2%.
US Import Prices Decline by 3% in September
US import prices tumbled at their fastest pace in nearly 5 years in September. The 3% fall follows a downwardly revised 2.6% drop in August. Last month's decline was the largest since April 2003. The easing in import prices suggests that producer and consumer prices will also fall.
EUR/USD - Euro Falls Through Recent Line of Support
The Euro-Dollar pair broke its recent line of support in late trading yesterday and the Euro pared all of its gains from the last 3 sessions falling back below 1.35. With the financial turmoil continuing investors are looking to the safety of US treasuries.
CAN Employment Jumps on Part Time Work
In Canada, employment increased by 107K in September, though 97K of that was due to an increase in part-time work. The unemployment rate remained at 6.1% when forecasts had it edging up.
CAN Trade Surplus Expans as Fall in Imports Outpaces Fall in Exports
The Canadian trade surplus increased to C$5.8 billion in August, as imports declined 5.8% due to lower imports of energy and automotive products. Exports were down 1.6%, so the overall balance moved in Canada's favor.
CAN New House Prices Flat in August
In a third release, the new housing price index saw flat growth for the month of August, and increased 2.3% compared to a year ago. That continues a pace of decelerating price growth in the Canadian housing market.
USD/CAD - Loonie Continues its Freefall
Despite the better than expected jobs and trade news, the US Dollar-Canadian Dollar pair jumped almost 500 pips from its open to test the 1.20 level. In the last 3 days alone the pair has jumped 1000 pips as fears of a global recession pressured commodity prices which in turn have hurt commodity currencies such as the Loonie.
Next Week
Finance ministers and central bankers from the Group of Seven nations began meeting today in Washington, and are expected to begin hammering out a round of coordinated, uniform measures to try and stem this crisis. On Monday, the US celebrates Columbus day and banks will be closed. Later in the week the US will release data on producer and consumer prices and retail sales.
