New York Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 16 08 22:13 GMT |

The buck caught a bid in the NY session as the Federal Reserve decided to keep rates unchanged at 2% despite heavy futures market pricing for a cut of at least -25 basis points. The statement balanced the risks of inflation and growth evenly and the Fed made no hint as to the future direction of rates, indicating they are likely on hold for the foreseeable future. The initial stock market negative reaction was reversed on subsequent news that the Fed will help in the rescue of the recently troubled insurance giant.

The JPY crosses were extremely volatile following the rate decision -- with an initial -80 pip plunge in USD/JPY towards 104.50 and sharper decline in EUR/JPY into the 147.20 area. The news on the insurance company’s potential rescue swung the pairs around into the intraday highs of USD/JPY 106.40 and EUR/JPY 150.50. The news since that the insurance company could face the same fate as the GSEs by being placed into a government conservatorship has the pairs trading lower in the early Asia session.

Moves in other pairs were less inspiring. EUR/USD fell about -40 pips in the session towards a close near 1.4130. GBP/USD rose 30 pips towards the 1.7840 zone. USD/CAD meanwhile was a touch lower, shedding about -55 pips into 1.0680/85 as oil prices traded higher into the $93/bbl mark. With the Fed decision now out of the way, the focus falls squarely once again on the goings on in the financials space. Expect the volatility in JPY crosses to continue until the equity market shakes things out.

Upcoming Economic Data Releases (Asia Session) Prior Estimate

* 9/17/2008 0:30 GMT AU Westpac Leading Index (MoM) JUL - - 0.10%
* 9/17/2008 1:30 GMT AU Preliminary BoP Imports MoM sa AUG - - 5.00%
* 9/17/2008 2:30 GMT AU Deputy Premier Julia Gillard Speaks in Canberra
* 9/17/2008 JN BOJ Target Rate 17-Sep 0.50% 0.50%
* 9/17/2008 3:20 GMT AU Reserve Bank Governor Stevens Speaks in Sydney

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.