Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 01 08 05:35 GMT |

The US Dollar strengthened in thinned holiday trading this session, as projections showed that Hurricane Gustav looked to hit Louisiana as a category 3 storm, not a category 5 as earlier assumed. However, the real story was the further collapse of GBP/USD, which plummeted to a 2 year low just above the 1.8000 level. The fall began when the UK’s Chancellor of the Exchequer Alistair Darling told a UK paper that the economic downturn currently underway may be the worst in 60 years. Adding to the gloom is the general assumption that the BoE will have to lower rates later in the year, although they will have a rate decision on Thursday in which the consensus is rates remain unchanged at 5.0%. The losses began from the opening of the gate, with a high of 1.8154, which collapsed to a 1.8004 low before the session end, extending the pairs losses to more than 8% for the month of August. This month’s drop represents the biggest since 1992. EUR/GBP blasted to a high of 0.8139, a level not seen since late 1999, and GBP/JPY hit a low of 195.14, a level not seen since March, as the British Pound fell through all sorts of bad technical levels in Asia.

EUR/USD peaked early to 1.4722, but the momentum failed and the pair eventually slid to a level of 1.4614 before leveling out near the 1.4640 region. As stated, some of the Dollar strength may be a bit prematurely based on the idea that Louisiana has averted another Katrina like disaster. The storm, seemingly lessening in strength, is poised to hit the coast by early morning in the US. Besides landfall for a potentially catastrophic hurricane, tomorrow is also a US holiday, and the FX market may be thinned due to this making for the possibility of explosive moves given the current environment. Good luck trading, and good luck to those in the path of the storm.

Upcoming Economic Data Releases (London Session):
01-05 SEP UK HBOS House Price 3Mths/Year AUG -8.80% -10.70%
01-05 SEP UK HBOS Plc house prices sa (MoM) AUG -1.70% -1.80%
9/1 6:00 GE Retail Sales (MoM) JUL -1.40% -0.30%
9/1 6:00 GE Retail Sales (YoY) JUL -3.90% -2.20%
9/1 6:30 AU RBA Commodity Index SDR YoY% AUG 41.10% - -
9/1 7:30 SZ SVME-Purchasing Managers Index AUG 54.1 53.2
9/1 7:50 FR PMI Manufacturing AUG F 45.1 45.1
9/1 7:55 GE PMI Manufacturing AUG F 49.9 49.9
9/1 8:00 EC PMI Manufacturing AUG F 47.5 47.5
9/1 8:30 UK M4 Money Supply (MoM) JUL F 0.90% - -
9/1 8:30 UK M4 Money Supply (YoY) JUL F 11.20% - -

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