US FED Holds Rates, AIG In Spotnight

Daily Forex Fundamentals | Written by Easy Forex | Sep 17 08 02:41 GMT |

U.S. Dollar Trading (USD) extremely volatile day of trading as the market recovered from the stock crash on Monday. Very skittish markets, news that American Insurance Group (AIG) was close to the brink sent stocks plummeting again before rumors swirled that the FED may intervene and provide loans to the financial giant. US August CPI was as expectation -0.1% M/M. The FOMC held rates at 2.00% citing concerns about downside risks to growth and Inflation. In the U.S. share markets, the NASDAQ was up 27.99 points (1.28%) and the Dow Jones was down 141 points (1.3%). Crude Oil closed down -$4.56 ending the New York session at $91.15 per barrel. Looking Ahead, August Building starts seen at .95M vs. .965M in July.

The Euro (EUR) traded in a fairly tight range until the US session where Oil losses and USD buying forced the pair lower. As US held rates at 2.0% the EUR was sold heavily. EUR/JPY was volatile tracking the rollercoaster ride in equities. Stronger Euro-zone Zew Economic sentiment at 40.9 vs. 55 expected. Overall the EUR/USD traded with a low of 1.4073 and a high of 1.4323 before closing the day at 1.4140 in the New York session.

The Japanese Yen (JPY) extended gains as risk aversion spiked on suggestions the AIG might go bankrupt, support at 104 gave way. When equities rebounded off lows and AIG loan rumors emerged, the USD/JPY traced higher. Overall the USDJPY traded with a low of 103.54 and a high of 106.69 before closing the day around 106.10 in the New York session. Looking ahead, BOJ rate decision today widely expected to remain at 0.50%.

TheSterling (GBP) tracked the Euro closely losing heavily against the JPY as risk aversion spiked, before staging a recovery on AIG news. UK data confirmed high inflation with a Y/Y figure at 4.7% in August. Overall the GDP/USD traded with a low of 1.7733 and a high of 1.8011 before closing the day at 1.7870 in the New York session. Looking ahead, Claimant Count expected at 22.3K in August. Also released the ILO Unemployment expected at 5.4% in July.

The Australian Dollar (AUD) fell below 0.8000 early in Asia as risk aversion soared and AUD/JPY plumbed new lows. Oil fell heavily and this left the commodity currency with a slightly offered tone. The rebound in US stocks saw a strong recovery into the days close. Overall the AUD/USD traded with a low of 0.7852 and a high of 0.8045 before closing the US session at 0.8000.

Gold (XAU fell in line with Oil and investors demand for cash and margin to cover losses in other markets. Overall trading with a low of USD$789 and high of USD$772 before ending the New York session at USD$780 an ounce.

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