The Dollar Strengthened During Overnight Trading
Overall, the dollar continued to post gains overnight. As has been the case during the last few days of trading, the market moved on a weak volume, showing that market participation continues to diminish. The dollar index reached 83.00 points value, nearing a 14-month high.
The Euro (Eur/Usd) is again losing ground as the dollar continues to strengthen. The pair moved in a tight range during Asian trading hours, as did most pairs, but fell approximately 100 pips as the European session got underway, reaching TheLFB S1 (1.3235). The euro is in danger of declining for the fifth consecutive day, dropping more than 350 pips in that period. The daily relative strength index has dropped below the 30% oversold line.
The Pound (Gbp/Usd) is extending the losses from Monday's trade, falling during the overnight session approximately 100 pips. Most of the moves came during the European session, after the pair traded in a tight channel during the Asian session. The pound managed to break below the previous day's low, although the trading volume has been very light. The UK CBI release shows the manufacturing sector is struggling as the value of new orders drop. The release number came in at -39, well below analysts' expectations of -30. The CBI industrial trends have reached a new low while manufacturing confidence had the steepest drop in the report's 28 year history.
The Aussie (Aud/Usd) tumbled 170 pips during the overnight session, reversing Monday's movement, which saw the Australian dollar strengthen against the dollar, the only major currency to do so. The aussie moved lower during both overnight sessions, unable to find a base until reaching 0.6840
The Cad (Usd/Cad) gained 80 pips during the overnight session and is now testing the high of the Monday. The pair came to life during the European session, after moving in a tight channel throughout the Asian session. Activity in the Canadian dollar will likely decrease ahead of the Bank of Canada announcing its monetary policy stance later this morning. The market expects a 50 basis points cut.
The Swissy (Usd/Chf) moved in a tight range during the Asian session, but activity increased during the European trading hours, as the pair tried to break through the resistance area, found at the high of Monday's trade. During the early hours of the European session, the swissy reached the highest level seen this year. The Swiss trade balance surplus remained stable in September from one month earlier. Compared with the estimated number, the trade balance was released higher, 1.44B compared with 1.20B. The report for August was revised slightly higher from, 1.43B to 1.44B
The Yen (Usd/Yen) continued to fall during the European session, as the pair weakened overnight, falling approximately 100 pips, reaching close to TheLFB S2 (100.95). The yen moved in-line with the futures market, which continues to point to a negative open on Wall Street this morning.
French Government injects money, Overnight Equity Markets Rise
Current Futures: Dow -94.00, S&P -10.00, NASDAQ -18.50
European Trade: Stocks in Europe and Asia rose for a second day, but U.S. futures are currently pointing to a weaker open on Wall Street this morning.
European equity markets traded higher overnight, following on from positive equity markets in Asia, helped by the French government's decision to inject up to $14 billion in the country's biggest banks. The government plans to buy debt issued by the six banks, in order to shore up the balance sheets. The shares of the six French banks, including Societe Generale and BNP Paris rose, as investors become a little more confident these banks will avoid bankruptcy. The French financial system is one of the biggest in Europe, along with the German, U.K. and Swiss financial systems.
S&P Futures are down as companies and analysts cut earnings estimates. The economic slowdown, coupled with weak consumer spending continues to affect a wide range of companies, dragging down future earnings estimates and dividends that investors receive. U.S. futures are lower despite Federal Reserve Chairman Ben Bernanke saying yesterday he supports a second stimulus program to help boost the economy.
The Nikkei gained 300.66 points (3.34%) to 9,306.25. The Australian S&P/Asx advanced 160.20 points (3.87%) to 4,302.50. The German Dax rose 23.28 points (0.48%) to 4,852.29, while the U.K. Ftse gained 58.41 points (1.36%) to 4,341.08.
Crude oil declines for the first time in the last few sessions. Crude oil for November delivery fell $0.72 (0.97%) to $73.53
Gold fell as the dollar strengthened against a basket of currencies. Bullion for immediate delivery slipped $0.90 (0.11%) to $789.10.
Previous Asian trade: Equity markets are advancing, helped by the news that the U.S. economy may see another stimulus package coming, boosting the demand side.
Lately, almost every U.S. based release pointed toward a strong slowdown or even recession. This, together with a downbeat economic outlook reported by Mr. Bernanke, say a second stimulus package would be welcomed, the economy faces a very high degree of uncertainty. Soon after the rebate check plan was voted, Mr. Bernanke said it is too soon to think of that as a rescue plan, but it seems things have deteriorated since then.
Depending on how the stimulus plan will function, it will be able to provide a real push forward for the real economy. The same thing happened with the rebate checks, which certainly helped the economy in the second quarter and a little part of the third quarter.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
|
