The NY session started out like every other day this week so far, with risk aversion in vogue. This turned out to be a major head-fake as US stocks would put in a huge rally and close up nearly 7% on the day. There is no rhyme or reason for the surge except that stocks hit, and in some cases went through, the fresh 2008 lows which looks to have triggered some major buying from a technical standpoint. The gains were despite terrible jobs data out of the US which showed initial claims at a seven year high of 516K from 484K the prior week. Estimates for the unemployment rate hitting above 8% no longer look so far away.
The return of risk appetite saw some major moves in FX land. JPY crosses caught a massive bid as stocks were scooped up while bonds were shunned. USD/JPY climbed about 190 pips in the session into the 97.80/90 zone and made a high at the 98.20/30 area. The move in EUR/JPY was even more impressive as the pair rocketed more than 470 points and was sitting near the 124.80/90 zone at the close. The pair moved a whooping 740 points from high to low in NY trading alone.
EUR/USD rallied hard on the back of the selloff in the ''safe haven'' buck. The pair jumped more than 230 points and was sitting by 1.2760/70 as NY came to a close. Oil prices, which popped higher on the back of the rally in stocks (despite elevated gasoline inventory numbers), helped to keep the pair supported here. This also led to sharp selling in USD/CAD, which plunged more than -180 points in the session to 1.2130/40 after making a high near the 1.2440 level.
Upcoming Economic Data Releases (Asia Session) Prior Estimate
- 11/14/2008 2:00 GMT NZ Non Resident Bond Holdings OCT 74.30% - -
