The buck was bid in NY trading as a massive unwinding of flight to safety trades in the latter part of the session helped propel the greenback higher. News of the US government potentially devising an RTC-style plan (Resolution Trust Corporation was set up during the early 90s to liquidate failing S&L corporations) to bail out financial markets was the clear catalyst in the upswing in stocks.
The Dow Jones reversed a whooping 600+ points into a close just above 11k, while the S&P 500 rocketed more than 4% in the largest gain since October 2002. The shift to risk assets was evident in heavy US bond selling as well. The US 2-year note yield jumped about 40 basis points from the intraday lows to near 1.75%. These events helped prop up JPY crosses and USD/JPY jumped towards a close near the 105.30/35 zone after making a bottom just below the 104.00 mark. EUR/JPY rose more than 100 pips off its lows as well towards the 151.05/10 area.
EUR/USD dropped nearly -150 pips in NY trading as the realization that the current financial crises has just as much impact across the pond became evident. The pair was sitting near the 1.4345/50 area as the session came to a close. Cable was punished as well as the UK rushed to stem losses in financial stocks by banning short selling until January. GBP/USD sank about -60 pips into the 1.8175/80 zone.
Upcoming Economic Data Releases (Asia Session):
- 9/18/2008 22:45 GMT NZ Visitor Arrivals AUG - - 2.10%
- 9/18/2008 22:45 GMT NZ Current Account Balance 2Q -3.500B -2.160B
- 9/18/2008 22:45 GMT NZ Account Deficit-GDP Ratio 2Q -7.90% -7.80%
- 9/19/2008 0:30 GMT CA Bank of Canada Deputy Governor John Murray Speaks in Toronto
- 9/19/2008 3:00 GMT NZ Credit Card Spending (YoY) AUG - - 3.80%
- 9/19/2008 3:00 GMT NZ Credit Card Spending for August
- 9/19/2008 5:00 GMT JN Leading Index CI JUL F - - 91.6
- 9/19/2008 5:00 GMT JN Coincident Index CI JUL F - - 103.3
