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Market Session Recaps

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New York Session

Mon, Dec 1 2008, 22:28 GMT
by Forex.com Research Desk

FOREX.com

US stocks plunged as poor data coupled with a somber assessment of the economy by Fed Chairman Bernanke led equities down nearly -9% in NY.  The rout erased most of the gains witnessed last week, when stocks rallied more than 12%.  ISM manufacturing registered a paltry and weaker than expected 36.2 read in November after a dismal 38.9 the prior month.  Later in the NY session, Fed Chairman Bernanke said that the US economy ''downshifted'' last month and is expected to remain weak for some time.  This was also following the NBER's announcement that the US recession started in December 2007-- which merely confirmed what the market had already sniffed out.

Risk trades in FX land were pared on the flight to safety.  USD/JPY shed another -70 points on the back of the overnight declines and was sitting near 93.20 as the NY session was coming to a close.  EUR/JPY witnessed a more pronounced decline of about -100 pips and the pair closed near the 1.1760/70 area.  The rally in US bonds accentuated the flight to safe assets as the 10-year note yield plunged -17 basis points (higher prices) to 2.75% while the 2-year slipped -7 bps to a meager 0.90% close.  We would expect this risk aversion pattern in FX to continue if stocks in Asia follow through with losses.  USD/JPY 93.00 and EUR/JPY 117.00 look like the next triggers for further weakness there.

Upcoming Economic Data Releases (Asia Session) Prior Estimate

• 12/02 00:30 GMT AU Current Account Balance 3Q -12774M -11100M
• 12/02 00:30 GMT AU Retail Sales Trend (MoM) OCT 0.20% 0.10%
• 12/02 00:30 GMT AU Retail Sales s.a. (MoM) OCT -1.10% -0.20%
• 12/02 03:30 GMT AU RBA CASH TARGET 3-Dec 5.25% 4.50%

Published on  Mon, Dec 1 2008, 22:30 GMT