Good morning from the cooling north of Germany. This decline is not only a result of temperature but also of the balance sheets from the banks. After we saw the dramatic situation of Lehman Brothers, AIG, Washington Mutual, HBOS and now the biggest Investment Bank in the United States, Morgan Stanley, is also searching for fresh money. Everybody is going to crave the weekenend because the traders and the markets could take a deep breath.
Market review
The RBNZ says the current turmoil in global markets has a negativ effect on liqudity in New Zealand, but the countrie’s banking system can work still fine. Governer Bollard says the bank would introduce two new measures to alleviate liqudity pressure. The central bank is going to allow bank paper in daily market operations and asset back securities as collateral in domestic operations. The statement supported the currency explicit and boosted the NZD/USD 2.7 % up.
Canadian banks do not seem to need help from Bank of Canada to manage their USD funding needs. The central bank mentioned this after announcing a 10 billion USD swap facility with the US Federal Reserve to provide liquidity yesterday. So the USD/CAD gained 1.4 % and closed the session at 1.0585.
Today USD rose broadly in asian trading. The main reason is that the US Government and Congress will come up soon with a plan to deal with the toxic bank assets, causing the credit crisis. The plan might be to set up a fund to buy distressed assets from banks, following the example of the Resolution Trust Corporation. This fund was used to clean up bad debts from savings and loan crisis in the late 1980s. At the moment the EUR/USD fell 0.9 % to 1.4220 while the USD/CHF is up 1.0 % at 1.1156. The USD – index, which tracks the US currency’s performance against six major currencies , was up 0.8 % at 78.79.
USD/CAD
Driven by turbolent Commodity prices, the CAD lost 5 % in the last month. But since the beginning of September the USD/CAD has been trading in a side range between 1,0566 and 1,0734. Yesterday the currency pair reached the support level. If the pair don’t cross the line, it will rebound and start a recovery phase to the resistance level.
AUD/USD
As well as the CAD, the AUD suffered from the declining commodity prices too. Since the mid of July the Aussie has been trading in an upward trend channel and lost nearly 20 % in value. Yesterday the Aussie rose up to the upper trendline but didn’t crossed it. There are no clear sign that the pair will break through the channel.
