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Market Session Recaps

New York Session

Mon, May 4 2009, 22:10 GMT
by Forex.com Research Desk

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Optimism ruled in the NY session and risk trades extended gains. Better economic data coupled with a massive rally in financials helped the ''risky'' currencies higher and left the buck on the mat. Pending home sales in the US rose 3.2% in March while the market was expecting a flat read. This indicator leads existing home sales by about two months and suggests we could be putting in a bottom. By no means does this suggest housing will be a booming industry from here, but the worst of the declines look to be behind us. Financial stocks rallied more than 10% after shrugging off concerns that many of the big banks will need to raise capital following the Fed's stress tests (results due later this week). The Fed's Senior Loan Officer Survey also showed credit strains slowing, with about 40% of banks tightening lending standards, the lowest since 1Q 2008. So the ''not as bad'' news continued to drive the emotional rally.

The buck was punished on the flight from safety. EUR/USD jumped nearly 170 pips towards 1.3400/10 ahead of the close. Hourly trendline resistance lurks into 1.3450 and we would expect some selling interest to emerge into that area. The risk that we get bad news on the banking front later this week still looms large. EUR/JPY added more than 110 points towards 132.60/70 while USD/JPY shed -40 pips as dollar weakness outpaced JPY-cross buying on the rally in equities. Commodity prices jumped 1.5% across the board and oil closed above $54/bbl to boot. This had AUD and CAD better bid all session. AUD/USD rallied 70 pips to just above 0.74 while USD/CAD sank more than -125 pip towards 1.1730/40. The sessions ahead should continue to see EUR and the yen crosses follow stocks. Look for these to extend higher if global equity marts follow the US performance.

Upcoming Economic Data Releases (Asia Session) prior expected

• 5/4/2009  23:30 GMT AU  AiG Performance of Service Index  APR  35.6  - -
• 5/5/2009  1:30 GMT AU  Building Approvals (MoM)  MAR  7.80%  2.80%
• 5/5/2009  1:30 GMT AU  Building Approvals (YoY)  MAR  -25.50%  -18.90%
• 5/5/2009  3:00 GMT NZ  ANZ Commodity Price  APR  1.00%  - -
• 5/5/2009  4:30 GMT AU  RBA CASH TARGET  5-May  3.00%  3.00%
• 5/5/2009  5:45 GMT SZ  SECO Consumer Climate  APR  -23  -25 

Published on  Mon, May 4 2009, 22:12 GMT

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