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Asia Session

Mon, Oct 6 2008, 06:22 GMT
by Forex.com Research Desk

FOREX.com

No longer does the ''Monday through Friday, 9-5'' cliche refer to those involved in various markets around the globe. Our financial system's woes has forced the weekend into play, making many jobs ''24/7''. Weekend news has become prevalent in these nervous times – from Fannie Mae and Freddie Mac to Bear Stearns and Lehman Brothers. The past two days brought no reprieve, with the latest headline containing German's Hypo Real Estate Holding AG, as reported by all major news outlets. The government of Germany, Europe's largest economy, arranged a bailout for Hypo Real Estate Holding AG, a giant property lender that came close to collapsing after private lenders pulled out of an earlier €35 billion ($48.2 billion) aid plan last week. This news sent shivers down the spines of traders and investors worldwide, leading to another broad-based sell off in assets of perceived risk.

Specific to the world of currencies, shockwaves were sent through the Carry Trade pairs, namely the Japanese Yen crosses. After closing last week above 145.00, EURJPY gapped lower by over 150 pips and has since seen a low south of 143.00. Through EURUSD is notably lower, now sitting in the lower 1.3600s, the primary contributor to weakness in the cross is USDJPY. Due to tremendous strength in the Japanese Yen, the pair has plunged nearly 200 pips from 105.40. The meltdown has also migrated to the high-yielding Australian and New Zealand dollars. Versus the Greenback, each has been battered, with the former shedding two big figures and the latter slipping one handle to 0.6500. Meanwhile, the buck is back, best represented by USDCAD. It has roared up to highs unseen since August 2007 where the pair peaked at 1.0870. Lastly, without any details given, please look at the staggering price move in EURAUD...

The destruction in ''risky'' assets has spared no market, and each new credit crisis victim adds fuel to the fire. Equities are again under massive pressure. The Nikkei is off by over -4% and S&P Futures are signaling another leg lower for US stocks. Commodity exposure is being reduced as crude oil futures now appear ready to test $90/barrel. The table has been set for more fireworks in the global financial system and will undoubtedly be felt as Wall Street reaches Main Street.

Published on  Mon, Oct 6 2008, 06:24 GMT