New York Session Recap

Daily Forex Fundamentals | Written by Forex.com | Jul 10 08 20:41 GMT |


The buck was sold in the NY session as a shaky stock market and a renewed pop in oil prices pushed the greenback lower. US stocks saw a rollercoaster of a day as financial market fears took hold once again. This was fueled by comments from former St Louis Fed President Poole who said that he believes the two major US mortgage GSEs are virtually insolvent and further by comments from Fed Chairman Bernanke and Treasury Secretary Paulson who pretty much said that a bailout of another major financial institution is unlikely. Despite this, one last push towards the close of trading helped the S&P 500 close up about 0.7%, but the USD was rattled nonetheless.

Higher oil prices didn't help, with oil shooting up more than $3 in a manner of minutes as NY floor trading came to a close. News of yet another Iranian missile launch and the end to a Nigerian cease-fire but a major bid on the commodity, which would close the session near $141.50/bbl.


Moreover, musings out of the Fed and ECB did not help the buck even though the comments seemed USD positive on the face of it. San Francisco Fed President Yellen repeated what she said a few days ago that the Fed will not allow a wage-price spiral and that inflation remains above her comfort zone. These hawkish comments from a typically dovish member suggest the Fed is ready to act if inflation gets more than uncomfortably high, and likely takes rate cuts out of the picture.

ECB President Trichet for his part reiterated that there was nothing to add to the ECB statement from last week, thus keeping the “no bias” reference in tact. He also noted that inflation expectations are well anchored, which is a prerequisite for an ECB on hold.

EUR/USD was higher, closing the session near 1.5780 after an open around the 1.5710 mark. The pair once again tried above 1.5800 but did not hold. USD/JPY was lower on the stock market turmoil, closing near 107.05 after opening near the 107.20 area. The pair once again failed to close above the 200 day moving average (which was 107.53 today) and thus suggests any material move higher is not likely at this point.

Upcoming Economic Data Releases (Asia Session) Prior Estimate

* 7/11 4:30 JN Industrial Production (MoM) MAY F 2.9% - -
* 7/11 4:30 JN Industrial Production (YoY) MAY F 1.2% - -
* 7/11 4:30 JN Capacity Utilization (MoM) MAY F -0.7% - -
* 7/11 5:00 JN Consumer Confidence JUN 34.1 - -
* 7/11 5:00 JN Consumer Confidence Households JUN 33.9 - -

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