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Market Opinion

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The Dow Jones faces another bad day.

Wed, Nov 19 2008, 23:53 GMT
by James Whyte

ForexAmericas

Market View for November 20, 2008

The Dow faced another bad day (especially the last 30 minutes), falling 427 points and closing below the 8000 mark.  The Fed cut its growth forecast for 2009, and CPI date indicated deflationary concerns.  Financials led the way with Citigroup stock falling over 22% to a 13-year low, with exceptionally high volume traded.  Commodity stocks were also big losers on the day.  Oil closed at 53.13, down 1.26.  With Auto Company bankruptcy worries climbing, and market sectors falling dramatically, traders are having a tough time finding a reason to buy.  European markets were down comparably, percentage wise (around 5%). The Citigroup news is very troubling on top of everything else, and we see the potential for a significant move lower over the next 24 hours in the currency markets.

EUR/USD:

We will sell any strength to 1.2600, with a target of 1.2400 initially, and a stop at 1.2660.  At NY close, we are testing Monday’s low of 1.2515.

USD/JPY:

We believe that Yen buying will return in earnest, and will sell ahead of 96.50, with a stop above 97.10. We see GBP/JPY back to 140 and EUR/JPY back 117.50-118.00 in the coming day.

GBP/USD:

Sterling has had some trouble on the downside below 1.4900, while a good spike on bad U.S. news during NY morning tested 1.5250.  Because of the buoyancy of the Pound at the 1.4900 level, we are not as keen to sell unless we see significant breaks to the down side.

AUD/USD:

This has been particularly sensitive to equity market movements, and we will look to sell rallies to .6500.  A break of .6335 will confirm a descent to .6195 initially, then .6100…barring any movement by the RBA to stop the drop.

Published on  Thu, Nov 20 2008, 00:36 GMT