The dollar managed to extend gains in what was a rather lackluster session for trading. Equity markets took traders on a rollercoaster ride with multiple positive to negative swings, only to end the day about -0.3% lower. Bonds were mixed as investors bought up the front end and 2-year yields plunged more than -10 basis points towards 1.96% while the 10-year was up a beep at 3.81%. The 2-year SWAP spread traded 25 basis points higher to a whooping 164 bps, signaling that inter-bank lending remains tight and financial stress palpable.
The moves in FX land came early in NY trading and the market eventually became glued to their TV screens in the latter half, with the Bernanke/Paulson testimony becoming a more pressing manner. The details of the bailout package remain unclear and markets await a draft of the legislation to provide some direction. EUR/USD traded about -50 pips lower into a close near 1.4620/25. The pair now likely sees good support at the 100hr SMA near 1.4580 next. The upside is likely to be capped near 1.4745/50 and we would be sellers into the 1.4750/1.4800 zone.
JPY crosses traded in a very tight range for most of the session as equities got whipsawed. USD/JPY eventually closed up about 20 pips near 106.10/15 while EUR/JPY shed roughly -30 pips into the 155.15 mark. USD/CAD trended higher as oil gave up more than $3 into a $105.50 close. Loonie as such ticked up 30 pips towards the 1.0385/90 mark.
Upcoming Economic Data Releases (Asia Session):
- 9/24/2008 22:45 GMT NZ Account Deficit-GDP Ratio 2Q -7.80% -7.90%
- 9/24/2008 23:50 GMT JN Merchnds Trade Balance Total AUG ¥91.1B -¥290.0B
- 9/24/2008 23:50 GMT JN Adjusted Merchnds Trade Bal. AUG ¥172.4B ¥112.5B
- 9/24/2008 23:50 GMT JN Corp Service Price (YoY) AUG 1.30% 1.20%
- 9/25/2008 1:30 GMT AU Reserve Bank Semi-Annual Financial Stability Review
- 9/25/2008 1:30 GMT JN BOJ Board Member Noda to Speak in Kushiro
