Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Oct 07 08 06:10 GMT |

An amazing night as far as moves go, with the surprise 1.0 basis point cut in Australia sparking a windfall of moves across the Asian FX spectrum. With the Royal Bank of Australia widely expected to cut the 7.0% rate by .50 basis points, (some believed a .25 basis point cut was in the works), the 1.0 point cut took the markets by complete surprise, with the RBA citing slowing global growth as the prime factor for the move. Many traders looked past that explanation, and looked to the possibility of a coordinated rate cut, something not seen since the days after the 9/11 terrorist attacks. The 1 point cut was the largest since a 1 point cut in a recession ravaged Australia in 1992. The cut to 6.0% did however bring about a rebound to falling Asian stocks. AUD/USD dropped from near 0.7205 to 0.7022 on the cut, but the Aussie eventually broke through to higher levels, topping out to 0.7315 before settling down near 0.7270 in early London trading. USD/JPY rebounded from six month lows to grind from 101.23 to 103.25 as traders scampered to buy what they felt were oversold markets. The Bank of Japan left rates unchanged as expected at .50%. EUR/JPY exploded from 136.60 early on to over 140.00, and AUD/JPY moved from 71.90 to over 75.50, leaving behind a five year low of 70.27. EUR/USD was in a 70 pip range until the RBA announcement, when it popped from 1.3490 to over 1.3610. The RBA rate decision is significant as it calls out to other central banks to follow the lead and cut rates in an aggressive manner. It would be wise to keep an eye on the possibility of some type of coordinated cut now that the gauntlet has been thrown to the ground Upcoming Economic Data Releases (London Session): 10/7/2008 7:30 EC EU Finance Ministers Hold Meeting 7-Oct 10/7/2008 8:30 UK Industrial Production (MoM) AUG -0.40% -0.20% 10/7/2008 8:30 UK Industrial Production (YoY) AUG -1.90% -2.00% 10/7/2008 8:30 UK Manufacturing Production (MoM) AUG -0.20% -0.20% 10/7/2008 8:30 UK Manufacturing Production (YoY) AUG -1.40% -1.60% 10/7/2008 10:00 GE Factory Orders MoM (sa) AUG -1.70% 0.50% 10/7/2008 10:00 GE Factory Orders YoY (nsa) AUG -0.70% -4.70% 10/7/2008 13:30 GE ECB's Trichet Speaks in Evian, France 7-Oct 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.