As was expected, the US Senate approved the $700 Billion Rescue Plan 74-25 (1 Senator abstained), and the Dollar rallied, and conversely, US equity futures fell, as they already shifted their sights to the evermore questionable passing of the Bill through the House of Representatives on Friday. Amid comments that Friday's vote could be a ''close call'' and with memories of the equity market carnage that followed the Monday rejection of the Bill will have all markets looking to the vote as the focal point of the week, usurping the ECB's rate decision later today and NFP on Friday in the US. The Dollar gained grounds versus the Euro, hitting a high of 1.3929, after starting the session close to 1.4032, with trading relatively thin prior to the ECB interest rate decision at 11:45 GMT, where it is expected that the rate will remain unchanged at 4.25%. Of greater concern in Europe is France proposing a 300 billion euro rescue package in case needed by a troubled financial institution, as well as Ireland boldly guaranteeing all Irish bank deposits, could be early signs of the credit disease spreading across the Atlantic. EUR/JPY churned lower from 148.69 to lows of 147.39 before bouncing back to the 147.70 level at sessions end.
USD/JPY moved higher in Asian trading, rebounding from a 105.31 NY session low, to hit a high of 106.29, boosted by the bailout as well as news that Warren Buffett pumped $3 into GE. The USD/JPY pair did drop from its highs to end the session higher at 105.75.
Down under, Australian Trade Balance came in strong and the AUD/USD popped to a 0.7942 high, but the highs were not sustained as traders feared a rate cut at the RBA's meeting next week. Most expect a .50 basis point cut at the meeting. AUD/JPY felt the effects of lower equities across Asia and a lessened appetite for the carry trade, and fell from 84.15 to more practical levels near 83.70.
Keep an eye on the ECB rate decision later although no move is expected, and as stated, keep in mind that the Rescue Plan will go to the House on Friday (NY) after the Asian week has ended.
Upcoming Economic Data Releases (London Session):
- 10/2/2008 6:00 UK Nat'wide House prices sa (MoM) SEP -1.90% -1.50%
- 10/2/2008 6:00 UK Nat'wide House prices nsa(YoY) SEP -10.50% -12.40%
- 10/2/2008 8:30 UK U.K. Bank of England Third Quarter Credit Conditions Survey 2 Oct
- 10/2/2008 8:30 UK PMI Construction SEP 40.5 38.9
- 10/2/2008 9:00 EC Euro-Zone PPI (MoM) AUG 1.10% -0.50%
- 10/2/2008 9:00 EC Euro-Zone PPI (YoY) AUG 9.00% 8.40%
- 10/2/2008 11:45 EC ECB Announces Interest Rates 2-Oct 4.25% 4.25%
