It seems that the post US election elation was short lived as Asian stocks came crashing down just like their US counterparts did earlier in the day, thus bringing back risk aversion to the FX markets. As losses in the Nikkei topped over 6% and the US Dollar retreated, the Yen gained ground from an early print of 98.38 to hit session lows of 97.55 before equalizing closer to 97.80. The driving moves were in the Yen crosses as investors once again fled riskier assets on the continued worries of global recession. The EUR/JPY move over the past 12 hours or so has been massive, as the pair has collapsed from 130.20 in midday NY trading to current lows near 125.30. GBP/JPY did pretty much the same thing, dropping to 154.13 from highs near 160.86. Lastly AUD/JPY dropped 4 big figures to 65.35 lows. The Euro was under pressure all session due to the EUR/JPY selling as EUR/USD dropped from 1.2954 to 1.2836 over the course of the day.
The main culprit one would assume is the upcoming rate decisions later in the London session for both the ECB and the BoE. The consensus is the ECB cuts rates by 50bp to 3.25% and that the BoE cuts 50bp as well to bring the UK key rate to 4.00% In light of the recent aggressive moves by the RBA down under, it's not out of the question that the cuts could be deeper.
Upcoming Economic Data Releases (London Session):
- 11/6/2008 11:00 GE Factory Orders MoM (sa) SEP 3.60% -2.30%
- 11/6/2008 11:00 GE Factory Orders YoY (nsa) SEP -7.60% -3.20%
- 11/6/2008 12:00 UK BOE ANNOUNCES RATES 6-Nov 4.50% 4.00%
- 11/6/2008 12:45 EC ECB Announces Interest Rates 6-Nov 3.75% 3.25%
