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Asian Session − Asian Stocks Rise as four regional central banks cut interest rates

Thu, Oct 9 2008, 09:18 GMT
by Peter Rosentreich

ACM - Advanced Currency Markets

Market Brief

The Dollar and Yen are weaker as Asian equities opened higher on the back of a unified rate cut by four regional banks. The Bank of Korea and Taiwan cut their rates by 25 basis points, while Hong Kong cuts to 2%.China cut it’s rates yesterday, in anticipation of the coordinated European cut. The Nikkei 225 initially rose by 1%, before giving them back, now trading -0.4%, BoJ is steadfast and holds at 0.5%. The Hang Seng is up 2.7% - financials leading gainers as bid to ease up credit markets spur trading.

In recent weeks we’ve seen the Yen and Dollar appreciate significantly as their low yielding nature and risk aversion drive markets. The EURUSD opened near 1.3580
Levels only to rise to 1.3700 two hours into Asian trading, on worries that rate cuts will not suffice to regain consumer confidence in the credit and financial markets. The Aussie moved higher as its central bank’s strong 1% rate cut earlier this week was bolstered by a liquidity injection of A$3.49Bn.

Volatility is at an all time high, all markets whether it be equities or forex are immensely choppy as continued uncertainty and low volumes are to blame. The Vix is up 7% at an unprecedented 57.53, the 52 week high being reached yesterday at 59.06. Crude continues to hold under $90 as demand drops and producers are forced to cut production. Gold rises and holds just under $900 as it becomes the only safe haven commodity one trusts.

One question to ask oneself is that how a concerted global rate cut will benefit the current markets if confidence is at an all time low, and no banks are lending?

Currency Tech

AUDUSD
R 3: 0.7738
R 2: 0.7355
R 1: 0.7157
CURRENT: 0.6920
S 1: 0.6754
S 2: 0.6715
S 3: 0.6683

EURJPY
R 3: 148.69
R 2: 146.85
R 1: 144.97
CURRENT: 137.35
S 1: 134.56
S 2: 133.53
S 3: 130.50

USDSGD
R 3: 1.4859
R 2: 1.4760
R 1: 1.4726
CURRENT: 1.4692
S 1: 1.4489
S 2: 1.4458
S 3: 1.4374

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

Published on  Thu, Oct 9 2008, 09:24 GMT