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Market Session Recaps

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New York Session

Wed, Aug 6 2008, 22:26 GMT
by Forex.com Research Desk

FOREX.com

Lower oil prices ran the show in the NY session as higher than expected weekly oil inventory numbers took prices to some fresh lows.  Crude opened the session near $119.52/bbl and dropped as low as $117.11/bbl on the inventory build, eventually closing floor trading around $118.40/bbl.  This helped the initially downtrodden stock market rebound.  US stocks opened lower and were down as low as -0.7% on the day, the decline in oil prices however helped stocks close up about 0.4% on the day.

EURUSD was lower, plunging from an open near 1.5465 to a close near the 1.5410 mark.  The pair got as low as 1.5398 but quickly rebounded.  Market participants await the ECB rate decision and more important press statement to make their next big move.  We are of the view that the event will turn out to be USD positive as Trichet will likely have to highlight the recent deterioration in Euro-zone data.  The potential for a EURUSD collapse is very real and a break below the bottom of the recent range near 1.5300 is plausible.

USDJPY caught up some more to the recent moves in other USD crosses, rallying towards a close near 109.80 after opening the session near the 108.65 level.  The reversal of fortunes in US stocks helped carry the pair higher as we approached the NY trading close.  Meanwhile USDCAD broke out to new 2008 highs as the decline in oil prices and a weak underbelly in the latest Ivey PMI number help prop the pair.  USDCAD opened near 1.0440 and rocketed towards a close near the 1.0490 mark.

Another opportunity to go short AUDUSD and NZDUSD looms tonight with the release of New Zealand (2245GMT) and Australian (0130GMT) employment data.  The market is looking for employment to deteriorate in New Zealand, with payroll growth expected to decline to a -0.6% annual rate from -0.2% and the unemployment rate to tick up to 3.8% from 3.6%.  In Australia, the unemployment rate is expected to increase to 4.3% from 4.2% while payrolls are expected to grow a paltry 5k after a 30k increase the prior month.

We believe the recent deterioration in economic data from both regions, coupled with the decline in commodity prices are fundamentally sound reasons to be negative on AUD and NZD.  Better than expected employment data, however, could see a brief pop in the currencies, which we believe would be a good opportunity to add to short positions.  We would suggest going 50% short prior to the numbers and adding to that short position on any bounce from better employment data.
 

Upcoming Economic Data Releases (Asia Session):

• 8/6/2008 22:45 GMT NZ Unemployment Rate 2Q                            3.60%        3.80%
• 8/6/2008 22:45 GMT NZ Employment Change (YoY) 2Q                 -0.20%       -0.60%
• 8/6/2008 23:50 GMT JN Official Reserve Assets JUL                     $1001.5B        - -
• 8/6/2008 23:50 GMT JN Machine Orders YOY% JUN                      5.10%        2.60%
• 8/7/2008 1:30 GMT AU Employment Change JUL                            29.8K         5.0K
• 8/7/2008 1:30 GMT AU Unemployment Rate JUL                            4.20%         4.30%

Published on  Wed, Aug 6 2008, 22:27 GMT