New York Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 29 08 22:12 GMT |

US stocks were annihilated as the US House of Representatives failed to pass legislation on the mortgage bailout. The Dow Jones Industrials plunged -7% or -780 points while the S&P 500 was down a whopping -107 points or nearly -9% -- the sharpest one day decline since the 1987 crash. The flight to safe assets was palpable as US bonds rallied hard. The 2-year note saw its yield down -44 bps to 1.66%. Gold rallied $28 to $907/oz while oil plunged -$11 to $95/bbl on fears that an economic downturn will continue to hurt demand.

Given the flight away from risk, the price action was most prevalent in JPY crosses. USD/JPY fell about -200 pips in the span to a close near 106.10 while EUR/JPY plunged about -220 pips into the 150.10/15 zone. We would expect follow-through into Asian and European stock markets to see further pressure on JPY crosses overnight.

Broadly speaking, the USD was pretty resilient as the fallout from the failure to pass the bailout has negative consequences for Europe as well. EUR/USD pared earlier losses and jumped 130 pips in NY towards 1.4430, but was lower on the day nonetheless. It was the same story for GBP/USD which rose 40 pips into the 1.8070 zone in NY, but was still down nearly four big figures (-400 pips) from the Friday close.

Global stock markets will be the focus over the next few days as tomorrow brings quarter-end with the potential for more liquidation of equity holdings. Then on Thursday we have the short-sale ban on financial stocks expiring. These coupled with the failure to pass the TARP legislation today is a perfect storm for further losses in stocks and continued downside pressure on JPY crosses.

Upcoming Economic Data Releases (Asia Session) Prior Estimate

* 9/29/2008 21:45 GMT NZ Building Permits MoM AUG 4.70% - -
* 9/29/2008 23:01 GMT UK GfK Consumer Confidence Survey SEP -36 -40
* 9/29/2008 23:15 GMT JN Nomura/JMMA Manufacturing PMI SEP 46.9 - -
* 9/29/2008 23:30 GMT JN Jobless Rate AUG 4.00% 4.10%
* 9/29/2008 23:30 GMT JN Job-To-Applicant Ratio AUG 0.89 0.88
* 9/29/2008 23:30 GMT JN Household Spending (YoY) AUG -0.50% -1.30%
* 9/29/2008 23:50 GMT JN Industrial Production (MoM) AUG P 1.30% -2.40%
* 9/29/2008 23:50 GMT JN Industrial Production (YoY) AUG P 2.40% -6.30%
* 9/30/2008 0:45 GMT US Fed's Hoenig Speaks in Gering, Nebraska, on Economy, Policy 30-Sep
* 9/30/2008 1:30 GMT AU Private Sector Credit MoM% AUG 0.50% 0.50%
* 9/30/2008 1:30 GMT AU Private Sector Credit YoY% AUG 11.20% 10.30%
* 9/30/2008 1:30 GMT AU Building Approvals (MoM) AUG -2.30% -1.00%
* 9/30/2008 1:30 AU Retail Sales Trend (MoM) AUG 0.10% 0.10%
* 9/30/2008 1:30 AU Building Approvals (YoY) AUG -3.70% -4.50%
* 9/30/2008 3:00 NZ NBNZ Business Confidence SEP -20.5 - -

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