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Daily FX Report

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The GBP dropped to the lowest level against the USD in almost 5 years

Fri, Oct 10 2008, 08:22 GMT
by Varengold Bank Research Team

Varengold Wertpapierhandelsbank AG

Good morning from wonderful Hamburg. There are a lot of hopes for more help of the governments on the G7 meeting later on the day. In spite of more rate cuts of central banks the markets did not rebound and the most of stocks and indices from all over the world closed the day with losses after an extreme sell off in US equities.

Market review

The GBP dropped to the lowest level against the USD in almost 5 years to 1.6847 on concern on the dispute between UK and Iceland governments over financial assets which will maybe escalate. The cable declined to 1.6922 in Tokyo from 1.7097 late in NYC yesterday. It earlier reached 1.6902 the weakest since November 2003. Also against the EUR the GBP fell to 79.94 pence per euro.

The JPY jumps against major currencies with no end in sight global stock plunge. The Nikkei dips near 11% to 8,183, the biggest 1-day drop since the 1987 stock market crash. Along with the Nikkei the USD/JPY is down to 98.80 after touching a day-low of 97.91 earlier in the day. The USD/JPY could fall below the 13-year low of 95.77, some traders say. The EUR/JPY is now at 133.49. That’s the lowest level since August 2005.

The GBP/JPY is also down to its 7-year low of 166.54 after touching a day high of 170.51. The dollar index touches a 14-month high at 81.939 as the AUD and GBP extend losses. The AUD and NZD also fell as US stock markets tumbles and investors dumped risky assets on concern the world will slip into recession, curbing demand for commodities both nations export.

NZD/USD

Since the middle of March the NZD/USD has been trading in strong bearish trend channel. After touching the upper trend line twice and the 0.69 resistance level the market rebounded and broke through the lower trend line. These movements could be a sign for further bearish movements.

EUR/CAD

Since the beginning of August the EUR/CAD has traded in a falling trend channel. After going through the 1.5 support level the currency pair recovered and is now over the upper trend line of the channel. This could be a buy-signal with a stop at the 1.62 resistance line.

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Published on  Fri, Oct 10 2008, 08:33 GMT