Asian Session: its gloom and doom around the world

Market Brief

The headlines are far from comforting this morning. While currency price action is somewhat subdued global markets suffered a huge blow yesterday, momentum that has carried on into the Asian and European opening today. Futures, stocks, commodities are all sharply lower with the Japanese Nikkei 225 down a massive 7% this morning on continued widespread pessimism in the global economy. The critical factor is the continued uncertainty surrounding the TARP, which continues to be argued on Capitol Hill. This political and bureaucratic game of musical chairs has the entire world on a knife edge, continued uncertainty and lack of confident decision making worsening sentiment. The appetite for risk is now at all time lows, investors not even jumping on massively undervalued securities.

U.S financials tumbled 12% at the end of trading yesterday, Asia follows suit. The biggest loser in Asia is definitely Japan. The Nikkei dropping more than 7% to below 8000 levels, back down to October lows. Japanese exports fell 7.7% in October from a year earlier, the biggest decline in almost 7 years. Japan’s trade surplus with the U.S contracts 27.5% and 38.7% with the rest of Asia, figures that don’t bode well with investors, further indication of a long and difficult depression. The Yen continues to rise amongst this economic climate, repatriation of funds from the Yen Carry-trade contributing to the Japanese currency’s bullish price action – the Yen trading a tight range this morning, 95.56 – 96.12. The USD remains strong as well demand for the currency continues to be high. However the currency was very volatile in yesterday’s session – TARP debacle on Capitol Hill and the desperate plea by the 3 big U.S Auto-makers contributing to further uncertainty.

$31Trillion has been erased from the global markets since the news of the sub-prime mortgage derivatives came to light some 18months ago. Gold shows some signs of renewal with its safe-haven status, rising $10/oz today. Crude however, fell below $53/bbl this morning.

Currency Tech

AUDUSD
R 3: 0.6600
R 2: 0.6425
R 1: 0.6334
CURRENT: 0.6286
S 1: 0.6245
S 2: 0.6027
S 3: 0.6006

EURJPY
R 3: 128.44
R 2: 125.48
R 1:; 123.11
CURRENT: 119.64
S 1: 119.10
S 2: 117.66
S 3: 115.00

USDSGD
R 3: 1.5680
R 2: 1.5411
R 1: 1.5304
CURRENT: 1.5289
S 1: 1.5099
S 2: 1.5000
S 3: 1.4921

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