The USD extended gains in NY trading as congressional leaders came closer to agreeing on the $700 billion mortgage bailout plan. The relief rally in stocks was palpable as shares jumped about 2% on the day. US bond yields, meanwhile, jumped as the flight to risk assets led to firm selling in this space. US 2-year yields rose 20 bps to 2.16% while the 10-year added 5 bps to 3.85%.
EUR/USD took a beating and shed about -70 pips to a close near 1.4610 after dipping as low as 1.4560 in the session. GBP/USD was decimated, plummeting -175 pips into the 1.8375 zone -- the pair got as low as 1.0805 at one point. USD/JPY was bid on the buck's strength and the strong equity market performance. The pair jumped 60 pips to a close near the 106.50/60 zone.
US economic data was terrible as durable goods orders plunged -4.5%, initial jobless claims jumped to 493K, and new home sales fell -11.5% in the latest month. The durables number paints a bleak picture for business spending in 3Q, initial jobless claims are now near recession levels, and housing clearly remains in the dumps.
With the US economic data looking bleak, the passage of the mortgage bailout is of the upmost importance to the markets right now. We await news on the details and expect volatility to be the flavor as we head into the weekend.
Upcoming Economic Data Releases (Asia Session):
- 9/25/2008 22:45 GMT NZ GDP QoQ 2Q -0.30% -0.40%
- 9/25/2008 23:30 GMT JN Tokyo CPI YoY SEP 1.30% 1.20%
- 9/25/2008 23:30 GMT JN Tokyo CPI Ex Food, Energy YoY SEP 0.20% 0.20%
- 9/25/2008 23:30 GMT JN Natl CPI YoY AUG 2.30% 2.10%
- 9/25/2008 23:30 GMT JN Natl CPI Ex Food, Energy YoY AUG 0.20% 0.20%
- 9/25/2008 23:30 GMT US Fed's Fisher Speaks to Investors, Economists in New York
