New York Session Recap

Daily Forex Fundamentals | Written by Forex.com | Jul 24 08 21:37 GMT |
New York Session Recap

The buck was lower in the NY session as the US stock market rout, led by a reversal in financials, put pressure on the greenback. Stocks overall plunged 2.4% as bank stocks plummeted 7.3% on the day. So the all clear sign will have to wait for another day it seems.

Providing another headwind, albeit a minor one, oil prices rose about $1 in the session to close near $125.65/bbl. With nothing fundamental to focus on, oil traders will be looking at the technicals over the next few trading sessions. The level we would highlight as a key trigger for further losses is $122/bbl, which is near the bottom of the Ichimoku cloud and the 100-day MA.

EUR/USD opened the session near 1.5675 and was sitting right around there at the close. We would expect firm resistance near the 1.5610 area on a move lower, which is the hourly trough from a few weeks ago. We are still buyers of USD on dips as the deterioration in Eurozone economic fundamentals continues unabated, while US fundamentals are just treading water.

Sterling (GBP/USD) was also broadly unchanged, closing about 10 pips higher after opening near the 1.9855 mark. The BOE's deputy governor Bean spoke during NY trading and said that the credit market turmoil could lead to a deeper and more prolonged slowdown -- clearly hinting at the deteriorating UK economy. On inflation, he basically said there is nothing much we can do near-term. Thus the prospect of a recession is likely to keep the central bank on hold for the foreseeable future. Our outlook for Sterling remains for further losses ahead and we would be sellers of the pair on rallies, especially into the 2.00 area.

Last but not least, USD/JPY gave back some of the overnight gains as the flight to safety in US markets led to a sharp pullback in yields. The pair opened near 107.80 and would close around the 107.30 area. Yields in the US fell about 12 bps, on the stock market tumult, and put pressure on the pair all session.

Upcoming Economic Data Releases (Asia Session) Prior Estimate

* 7/24 23:30 GMT JN Tokyo CPI YoY JUL 1.50% 1.80%
* 7/24 23:30 GMT JN Tokyo CPI Ex-Fresh Food YoY JUL 1.30% 1.60%
* 7/24 23:30 GMT JN Natl CPI YoY JUN 1.30% 1.90%
* 7/24 23:30 GMT JN Natl CPI Ex-Fresh Food YoY JUN 1.50% 1.90%

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