Fear Stalks Global Markets

Daily Forex Fundamentals | Written by Investica | Oct 06 08 10:30 GMT |

Trends in the banking sector will tend to dominate for now as risk aversion remains extremely high. The dollar looks to offer little value at current levels given underlying US stresses.

The US currency was also still being supported by very tight money markets with dollar Libor over the 4% level. The House of Representatives approved the amended financial rescue bill and it will be signed into law very quickly, but confidence in the financial system remained very fragile.

The US employment data remained weak with non-farm payrolls declining by a further 159,000 in September. This was the ninth successive decline in employment and the steepest monthly fall since 2003. The unemployment rate held steady at 6.1% as people withdrew from the labour market while there as a decline in weekly hours. The data will reinforce fears over a further deterioration in the economy with pressure for lower Fed interest rates.

The economic data was over shadowed by a renewed spike in risk aversion and major fears over the banking sector, especially with fresh turbulence in the European financial sector following confusion surrounding talks over the weekend and the need for a fresh rescue plan for German bank Hypo Real Estate.

Investica
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