Daily FX Report

Daily Forex Technicals | Written by Varengold Bank | Oct 16 08 07:36 GMT |

Good morning. The FX market is comparatively steady than the Equity market. Yesterday the Equity markets crashed down again. The Dow had its biggest decline since 1987, with a loss of 733.08 basic points. Also other major indices like DAX, FTSE, NIKKEI and co. note losses in two digit percent areas Markets review The JPY falls across the board despite the Nikkei decrease of 9.6%, with a strong positive correlation between stocks and USD/JPY, which shows signs of break downs. The FOREX market is getting pushed around by players who are rushing to dump risky assets. Some traders said exchange rate moves are being driven by what investors need to sell or buy because they are dumping assets. The USD/JPY is up 0.3% to 100.25, while the EUR/JPY climbs up 0.3% to 135.40. The AUD/JPY dips 4% to 67.62 while the NZD/JPY goes up to 4% to 61.49. On a 90- day basis, the correlation between Nikkei and USD/JPY is down to -0.79 from a plus of 0.55 in September, while the Nikkei and AUD/JPY correlation is still at a very high level of +0.94. The correlation between Nikkei and EUR/JPY is at +0.92. The AUD jumps down 1.9% to 0.6508 despite broad slide in Asian Shares. The currency surge is due to short covering, adding that there wasn't any particular bit of news that triggered the move. So some people in the market were trying to spread false rumours about the RBA intervening. The market moves are exacerbated by low liquidity. The EUR and high yielding currencies slide as world stocks fell, ending a rally seen earlier this week after US and European governments announced sweeping bank rescue plans. The EUR is down 1.02 percent and close the day at 1.3453, GBP is down 1.36 percent and close at 1.7175 and CAD lost 2,5 percent. Technical analysis AUD/JPY After the high losses of the AUD versus the JPY the currency pair's support level established at 64.81. The market touched the support level the third time after a trend return at the beginning of this week. The market trades straight at the Support actually and a further increase could cement the support but a break could be possible. EUR/USD After the big decline of the EUR/USD the market trades now around the 1.35 level. Since the beginning of October the rate resists at the 1.3759. The direction of the currency pair depends now on the fundamentals between US and EU economic zone depending on what economy can accomplish the credit crises better. Pivot Points - Daily FX Support and Resistance Levels Daily Calendar & Key FX Events Varengold Bank IMPORTANT NOTIFICATION TO BE READ IN CONJUNCTION WITH THE CONTENTS OF THIS DOCUMENT This document is issued and approved by Varengold WPH Bank AG. The document is only intended for market counterparties and intermediate customers who are expected to make their own investment decisions without undue reliance on the information set out within the document. It may not be reproduced or further distributed, in whole or in part, for any purpose. Due to international laws/regulations not all financial instruments/services may be available to all clients. You should have informed yourself about and observe any such restrictions when considering a potential investment decision. This electronic communication and its contents are intended for the recipient only and may contain confidential, non public and/or privileged information. If you have received this electronic communication in error, please advise the sender immediately, and delete it from your system (if permitted by law). Varengold does not warrant the accuracy, completeness or correctness of any information herein or the appropriateness of any transaction. Nothing herein shall be construed as a recommendation or solicitation to purchase or sell any financial product. This communication is for informational urposes only. Any market or other views expressed herein are those of the sender only as of the date indicated and not of Varengold. Varengold reserves the right to consider any order sent electronically as not received unless it is confirmed verbally or through other means.