Daily Analysis
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Dollar falls as Lehman files for Bankruptcy
Mon, Sep 15 2008, 12:00 GMT
by Benny Menashe
| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
| 1.4665 | 108.15 | 1.8345 | 1.146 | |
| Resistance | 1.462 | 107.95 | 1.8245 | 1.1415 |
| 1.4545 | 106.9 | 1.8175 | 1.128 | |
| 1.423 | 103.8 | 1.7865 | 1.106 | |
| Support | 1.411 | 103.1 | 1.7725 | 1.101 |
| 1.3975 | 102.6 | 1.754 | 1.0885 |
The USD was down against the euro and the yen after the US’s fourth largest investment bank, Lehman Brothers Holdings Inc, planned to file for bankruptcy. This has sparked fresh concerns over the US economy and speculation that the Fed will cut interest rates. The central bank in the states implemented a series of measures on Sunday including accepting equities as collateral for cash loans at one of its credit facilities.
However, the greenback’s decline was held in check as the Bank of America announced it would buy Merrill Lynch and Co for $50 billion. The EUR/USD was at 1.4284 at 8.40 am GMT.
The situation with Lehman has reduced the appetite for higher yielding assets funded in yen. The Japanese currency was at near two year highs against the ‘Aussie’ and ‘Kiwi’ as carry trades were unwound. Bank of America Corp. and Barclays Plc backed down from a potential bailout of the fourth largest U.S securities firm, Lehman Brothers on Monday, lessening the attractiveness of carry trades and pushing the yen higher. ``With the Lehman bankruptcy news, risk appetite is going to be very weak,'' said Greg Gibbs, a currency strategist at ABN Amro Holdings. ``The Aussie and Kiwi should be soft today.'' The USD/JPY was trading at 104.63 at 8.42am GMT.
Meanwhile in London on Monday, Sterling was up against the dollar on speculation the Fed would cut interest rates to help a struggling US economy. Eyes will be on tomorrow’s interest rate decision in the States with growing feeling that the rate of 2% will be cut. ``Lehman is a massive market player and the fact that it's going into bankruptcy is putting downward pressure on the already distressed U.S. financial system,'' said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi Ltd. ``This is leading to a massive dollar sell off, which is clearly benefiting the pound.'' The UK currency soared, breaking the 1.80 level earlier. At 8.43 am GMT cable was at 1.7988.
Today's Economic Events
| Time | Event | Currency | Period | Previous | Forecast | Significance |
| 13:15 | Capacity Utilization Rate | USD | Aug | 79.90% | 79.70% | 2 |
| 13:15 | Industrial Production m/m | USD | Aug | 0.20% | -0.20% | 2 |
| 12:30 | New Motor Vehical Sales m/m | CAD | Aug | -1.00% | 2 | |
| 9:00 | ECB President Trichet Speaks | EUR | 3 | |||
| 7:15 | Retail Sales m/m | CHF | Jul | 0.70% | 2.30% | 2 |
| 7:15 | PPI m/m | CHF | Aug | 0.50% | 2 | |
| 1:30 | Housing Starts | AUD | Quarterly | -3.30% | 2 |
Published on Mon, Sep 15 2008, 12:29 GMT
Archive
- The Dollar gains as the markets tumble and investors seek a safe haven
Published On Fri, Jul 3 2009, 11:47 GMT - Dollar rises as the market are down and China still intends to use the greenback
Published On Thu, Jul 2 2009, 11:36 GMT - The YEN declines versus the Dollar and the Euro on Tankan Report
Published On Wed, Jul 1 2009, 11:45 GMT - Sterling rockets after good housing data and a weak Dollar
Published On Tue, Jun 30 2009, 11:30 GMT - The Dollar rises against most majors as China say the currency may still dominat
Published On Mon, Jun 29 2009, 10:33 GMT
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