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Asian Session – BoJ injects $14Bn into money markets as Asian stocks wake up to the global crisis

Tue, Sep 16 2008, 09:03 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Market Brief

The Usd was mixed in Asian Session, as the residual effect of yesterday’s shocker played in participant’s minds. The EurUsd saw choppy trading between 1.4176 and 1.4324, while the Jpy continued to gain from the market turbulence, with the UsdJpy falling from 106.04 to 103.68. High yielders & carry trades came under pressure, as the market wanted nothing to do with the extra risk in this uncertainty environment. The AudUsd fell from 0.8092 to 0.7859 and the GbpJpy dropped from 189.86 to 185.75. As it would be expected, this weekend’s event has a huge effect on EM assets classes.

Risk aversion is at a record high, with the Yen and Swiss Franc gaining, as investors seek their “safe haven” attributes. Yen is rising 250pips (4% since Friday’s close around 108.00) against the dollar to 103.90 in the morning session. U.S financial woes are affecting the Asian markets gravely in opening, as most markets were closed for holiday yesterday, when Lehman Brothers, Merrill Lynch and AIG news played out.

Yesterday’s Wall Street action was one directional, with S&P leading the losers down -4.71%. Asian equities have followed, with the Nikkei down 5%, to a three-year low, as investors dumped shares following WS meltdown. The Hang Seng dropped close to 6% and Shanghai composite down 4.5% as the People’s Bank of China cut the 1 yr benchmark lending rate 27bp basis points (first cut since Feb02). Since roughly June, Chinese officials have been shifting their focus away from controlling inflation towards supporting growth.

The critical event of the day will be the FOMC meeting and rate decision today at 18:15 GMT. An interesting figure to note is that on Friday’s close 12% of market professionals believed the FOMC would cut rates, which number is just below 70%. Despite the massive turmoil we are still expecting the Fed to hold rate steady at 2.00%.

Currency Tech

AUDUSD
R 3: 0.8300
R 2: 0.8263
R 1: 0.8077
CURRENT: 0.7871
S 1: 0.7675
S 2: 0.7616
S 3: 0.7560

EURJPY
R 3: 153.57
R 2: 152.92
R 1: 149.49
CURRENT: 148.01 S 1: 147.54
S 2: 146.21
S 3: 145.75

USDSGD
R 3: 1.4542
R 2: 1.4478
R 1: 1.4394
CURRENT: 1.4348
S 1: 1.4234
S 2: 1.4142
S 3: 1.4116

• S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot

Published on  Tue, Sep 16 2008, 09:09 GMT