Asia came in to a bit of relief. After a few weeks of unprecedented moves in the financial markets, markets were relatively tame today albeit still choppy. JPY crosses gapped lower from Friday after bouncing with US equities. Part of the reason was that there is still some uncertainty concerning the details of the bailout package. There was also some interest to sell the USD as EUR/USD finally rallied through 1.4500. The thinking with the USD is that the injection of liquidity into the markets could become inflationary as well as putting the US government's own financial healthy at risk.
Looking forward we have a light economic calendar in London but the market is being driven more by news flow anyway. Other countries are joining the Fed in increasing liquidity and restricting short sales in equity markets. While in the near term this is being viewed as positive, the long term implications could be negative. Could we be planting the seeds for a future disaster?
Upcoming Economic Data Releases (London Session):
- 9/22/2008 7:00 EC ECB's Trichet Speaks in Bratislava 22-Sep
- 9/22/2008 8:00 UK BOE's Gieve to Make Speech 22-Sep
