London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 15 08 11:53 GMT |


The investment community's flight to safety continued in the London session, with US stock futures slipping about -4% in broad terms while yields have now plunged 20-40 basis points. JPY crosses remained under pressure as the selloff in equities pares carry trades. USD/JPY remained heavy and remained down more than -250 pips near the 105.30/40 area at the London close. EUR/JPY was -470 pips lower on the day and remained near the intraday lows around the 148.60/70 area.

EUR/USD was sold in a big way in London as market participants come to the realization that the US subprime problem is also a big problem for European banks. Indeed, credit market write-downs have been just as severe across the pond as they have been here in the US, at well over $200 billion in losses for each. The pair plunged more than -200 pips towards a London close near the 1.4180 level. Oil came off sharply, taking out the psychologically significant $100 mark towards a low just below the $95 mark and helping the buck as well. The fact that US economic fundamentals remain relatively stronger than European ones should help keep the pressure on EUR/USD.

Economic data this morning is expected to be ignored as the market clearly has much bigger fish to fry. Talk about a Fed rate cut also remains prevalent. While this move is probably unlikely given the Fed's expansion of accepted collateral to now include stocks, it cannot be ruled out if things take a turn for the worse in the NY open. Much of the action will likely be concentrated around the JPY crosses as traders in these will be keenly following the goings on in stocks. Stay tuned!

Upcoming Economic Data Releases (NY Session) Prior Estimate

* 9/15/2008 12:30 US Empire Manufacturing SEP 1 2.8
* 9/15/2008 13:15 US Industrial Production AUG -0.30% 0.20%
* 9/15/2008 13:15 US Capacity Utilization AUG 79.60% 79.90%

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