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Market Session Recaps

London Session

Tue, Nov 20 2007, 05:42 GMT
by Forex.com Research Desk

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Tuesday’s Asia session opened with most of the high yielding JPY crosses dealing very close to their lows for this young week.  Following an absolute drubbing of financial stocks in Monday’s NY session, and  a broad sell off in the overall US equity markets, the JPY crosses continues to buckle from the pressure.  Many Forex traders entered the session with one eye on recent support levels for the pairs, and the other one Asian equity indexes, which they anticipated to be the fuse that would ignite another round of risk aversion.

The market’s hunches regarding the follow through from New York trading the carry would see were correct.  Despite a choppy start to the session which saw seemingly random price action, the JPY crosses began to deal offered as Asian stocks opened lower.  After spending much of the early Tokyo morning dealing above 161.00, bids ran dry for EURJPY.   The pair spiraled 70+ pips from its highs to the 160.50 area where it met with some solid support.  GBPJPY also was caught in the carry unwind frenzy, dropping 110+ pips from it session highs, and a whopping 220+ points from highs made in the previous New York session.  The pair finally found some buyers into the 224.30s.  This high yielders weren’t alone, as NZDJPY and AUDJPY each deflated by 100+ pips on the heels of a 2%+  decline in the Nikkei 225.

Ahead in the upcoming London session, the carry trade will continue to remain in focus.  In an already shaky market, currency traders may be in store for even more exaggerated moves.  With fear of riskier assets already in the air, as we have seen, the slightest negative can send the high yielders retreating lower.

Published on  Tue, Nov 20 2007, 05:43 GMT


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