A Flat Asian Session

Daily Forex Fundamentals | Written by TheLFB-Forex.com | Sep 03 08 03:35 GMT |

Overall, the Asian session had been slow, having most of the pairs trading flat in a small range.

The Euro (Eur/Usd) declined 70 pips in the last trading day, reflecting the selling pressure from the crude oil market. The pair reached a 7-month low because the dollar is advancing against a wide range of currencies, and the market sees the yield differential between the dollar and the other major pair as getting smaller. In the Asian session, the pair moved in a 35 pips range.

The Pound (Gbp/Usd) extended losses from the last trading sessions even after Mr. Brown proposed a number of measures to steer the economy from the face to recession. The pair fell 180 pips yesterday, reaching the lowest valuation since March 2006. Since the U.S. session closed, the pair decline 25 pips.

The Aussie (Aud/Usd) closed the session 130 pips lower as the RBA decided to cut the overnight rate for the first time in the last seven years. The market was expecting this move for a long time since the aussie had a huge fall in a short period of time. In the Asian session, the pair fell another 60 pips, extending the losses from the last days of trading.

The Cad (Usd/Cad) had a very volatile session, moving all over the place in a 60 pip range. At the beginning of the U.S. session, the Bank of Canada will set the overnight interest rate and this will certainly affect the pair's behavior. In the last trading session, the cad reached the highest point in over a year.

The Swissy (Usd/Chf) gained 50 pips yesterday, even though at one point the pair was trading above TheLFB R2. In the Asian session, the swissy moved around the neutral pivot point, in a 35 pip range.

The Yen (Usd/Yen) managed to break the high of the previous session yesterday and tested the TheLFB S2 area. The pair very closely followed the movement in the equity markets yesterday, moving in the same direction most of the time. The daily chart shows the pair is trading between the 20 and 50-day moving average.
Asian shares advancing from a two year bottom

Current Futures: CAC +67.00, DAX +89.50, FTSE +21.00

Asian trade: Asian stocks are trading in the green, advancing from a two year bottom, despite the U.S. equity markets closed lower. The market sees a better outlook for the economy now that oil touched a 5-month low. Asian shares are advancing for the first time this week.

The future market was pointing to a very strong U.S. equity market open yesterday, something that we have not seen lately. However, after the opening bell, shares started slowly to decline and by the end of the session, both the Dow Jones and the S&P 500 were down in the red. The motive behind this was that the losses from the commodity stocks were bigger than the gains from airline and retail companies, the winners, from the oil decline.

In Japan, the market rose, lead by manufacturers. The crude oil decline will help the manufacture's balance sheets by cutting some parts from the production costs. The Nikkei advanced 132.22 points (1.05%) to 12,741.69. The Australian S&P/Asx fell 3.60 points (0.07%) to 5,112.40, because an important number of the shares listed on the Australian stock market are commodity stocks.

Gold fell $0.90 (0.11%) to $809.60 due to a plunge in energy costs and a strengthening dollar curbed the demand for the precious metal as a hedge against inflation.

Crude oil slipped $0.53 (0.48%) to $109.18, after it fell almost 5% yesterday, attributable to the Gulf of Mexico rigs will begin to produce oil again.

Previous Wall Street trade: After rising in the morning, stocks couldn't hold on to their gains in the afternoon as concerns regarding the overall global economy may have weighed on investor sentiment and spurred traders to take their gains off the table. "Oil has been declining on the "Peak Oil" theory, and investors may now be trading stocks on the Peak Growth theory," said Matthew Carniol, chief currency strategist at TheLFB-forex.com. "Falling prices for oil and other commodities are viewed as a proxy with regards to the overall health of the U.S. and global economy. If the world is demanding less resources, it is doing so as a result of slower growth now and because growth is expected to slow in the future. The assumption is that Q2 U.S.GDP probably represents a peak for the year, especially since growth decelerations in Europe and parts of Asia are expected to crimp demand for U.S. exports."

Previous European trade: Both European and Asian stocks are building up pressure from two possible threats: inflation and lower growth. The gains from the oil market, fueled by fear that hurricane Gustav will disrupt the world supply; make investors see inflation as a big problem in coming quarters. Inflation erodes the purchasing power of consumers, reducing the demand side for retail goods and services. At the same time, the global slowdown will further reduce demand, both from consumers and from industrial clients. On the day, the fall in oil was a boost to airlines and auto manufacturers. The UK FTSE rose 17.90 points (0.32%) to 5,620.70, while the German dax advanced 96.67 points (1.51%) to 6,518.47.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com