Good morning from Hamburg and welcome to the next week. Normally the oil price should grow up in the hurricane season but now we got the other way around. In those times we lose the faith in the rules of the market. The oil price took the other direction and broke through the $100 level. With the high correlation to the EUR we can expect some more surprises in the currencies.
Market review
The USD fell on Friday, posting its worst one-day decline against the EUR in six month. The uncertainty about the future of the troubled investment bank Lehman Brothers and the second straight month of decline in retail sale data’s pressures the currency. Worries about Washington Mutual Inc also added a selling pressure on the USD after the largest US saving and loan institution projected further write downs. That’s why the EUR/USD increased 1.3 % at 1.4212., The USD rose 0.7 % to 107.87 against the JPY, supported by a modest rebound in US stocks. The EUR/JPY jumped 2.0 % and bounced back from a two-year low of 147.47 on Thursday. It was the best one-day gain for the EUR in a year against the JPY.
The GBP posted its biggest gain versus the USD on Friday since the 1st September in 2005. With an increase of 2.5 % it could rise back to 1.8110. The GBP could increase also against other majors. So it rose 2.2 % against the JPY, 1.5 % against the CHF and 0.6 % against the strong EUR.
The USD/MXN firmed on Friday after unexpected weak US consumer spending data which led investors to bet that the Federal Reserve could cut interest rates further to prop up the economy in the United States. The same trend was visible in the CAD. It rose on Friday 1.5 % and marked its highest increase in three weeks.
EUR/JPY
The EUR lost in August and September more than 13 percent versus the JPY. This was the biggest realized loss in more than 10 Years. Last weeks development with two Dojis with an adjoining spike might be a sign for a trend turnaround. If the impulse is strong enough, we will expect a recovery phase.
USD/CHF
In the USD/CHF we can see the same movement, but on the other side. After the big comeback of the USD since July, the CHF became stronger and the currency pair turned with a gap today downward. If the pair breaks through the support level at 1.11, we will estimate a further decrease.
