Market Plunges, Dollar Soars

U.S. Dollar Trading (USD) was second only to the Yen as markets around the world were deep in the red and risk aversion came back into play. September Durable Goods Orders 1.0% vs. -2.6% previously. Hurting sentiment was the large drop in September Home Sales at 402k vs. 440k forecast. In US Stocks, DJIA -119 points closing at 9762, S&P -20 points closing at 1042 and NASDAQ -56 points closing at 2059. Looking ahead, Q3 GDP is forecast at 3.3% vs. -0.7% previously. Also released Weekly jobless claims forecast at 521k vs. 531k previously.

The Euro (EUR) found support in Asia from sovereign buying but as US stocks continued to plunge and EUR/JPY selling intensified through the 135 level the market shunted another leg lower to the 1.4700 figure. German Import Prices were -0.9% vs. -0.6% forecast. Overall the EUR/USD traded with a low of 1.4691 and a high of 1.4841 before closing at 1.4700. Looking ahead, October German Unemployment Forecast at 8.3% vs. 8.2% previously.

The Japanese Yen (JPY) gained across the board as traders took risky trades off the table with the mounting global equity losses. USD/JPY reversed back through 91 Yen and AUD/JPY and NZD/JPY fell over 3% each. After a large run up over the past three weeks the markets were caught long. Overall the USDJPY traded with a low of 90.55 and a high of 91.73 before closing the day around 90.60 in the New York session. Update September Industrial Output Preliminary at 1.4% vs. 1.0% previously.

The Sterling (GBP) was surprising resilient from very heavy EUR/GBP selling through the 0.9000 level. Cable held above 1.6300 and rallied at the start of US through 1.6400 before falling as US stocks slumped. GBP/JPY succumbed to Yen strength but was not as weak as expected. Overall the GBP/USD traded with a low of 1.6286 and a high of 1.6467 before closing the day at 1.6380 in the New York session. Looking ahead, September Mortgage lending data forecast 0.8bn vs. 1.01bn previously.

The Australian Dollar (AUD) was crushed under risk aversion even as CPI data came in stronger than expected. Q3 CPI 1.0% vs. 0.8% forecast. Heavy selling on AUD/JPY came through in Asia and continued throughout the day. Overall the AUD/USD traded with a low of 0.8963 and a high of 0.9207 before closing the US session at 0.8970.

Oil & Gold (XAU) fell in the face of USD strength but safe haven flows stemmed the loss. Overall trading with a low of USD$1026 and high of USD$1042 before ending the New York session at USD$1029 an ounce. Fell heavily on recovery concerns. Crude Oil was down $2.09 ending the New York session at $77.46.

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