London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 19 08 12:13 GMT |

The buck saw a mixed performance against the majors in London trading as markets continued to digest the latest US bailout. The proposal by the US Treasury and Federal Reserve to shift distressed mortgage assets from bank balance sheets to a new government institution (details still upcoming) coupled with the SEC’s ban on short selling of roughly 800 US financial companies sent global stock markets soaring. Equity marts in Asia jumped more than 4%, and nearly 10% in some cases. Europe meanwhile has added about 7% thus far. The flight to risk assets helped the JPY crosses accelerate gains in the London session. USD/JPY added another 50 pips to a close near 107.50 while EUR/JPY popped another 120 pips into the 152.90/95 zone. Also helping the matter was the massive selling in bonds. This was most evident in the reversal in US 2-year yields which have jumped more than 35 bps thus far into 2.05% -- after falling as low as 1.35% yesterday. EUR/USD sat on the sidelines for the most part and ended the session up roughly 40 pips near the 1.4230/35 area. GBP/USD meanwhile shed about -40 pips towards a close near the 1.7990 mark. The focus in the NY session will once again be on the goings on in equity markets and further details of the proposed government bailout. JPY crosses are likely to see most of the price action again as Europe and the US remain on the same boat in terms of credit market turmoil and as such the direction in EUR/USD is likely to be mostly sideways. Upcoming Economic Data Releases (NY Session) Prior Estimate U.S. Treasury Secretary Paulson to hold news conference to at 1400GMT Chicago FRB President Evans speaks on US economy at 1700GMT Forex.com http://www.forex.com DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.