London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Oct 13 08 12:29 GMT |

Further guarantees for bank borrowing by European leaders saw currencies across the pond strengthen against the buck. Euro-zone leaders made it clear that they would not allow systemically critical banks to fail while UK leaders took it one step further by saying that they will invest about $64 billion to buy stakes in banks.

An additional source of USD weakness also looks to be a new initiative by several central banks to flood the system with unlimited dollar funds. The ECB, the BOE and the Swiss central bank are expected to auction unlimited amounts of USD funds which had been previously capped. This fresh supply of USD into the market looks to be weighing on the buck some.

EUR/USD was about -40 pips weaker after opening the London session near the 1.3660 mark. GBP/USD however continued to rocket higher, adding more than 170 pips since the London open to currently sit near the 1.7350/55 area. We had noted in recent days that we felt the selloff in GBP/USD has been overdone. We continue to expect weakness into the 1.72/1.70 area to see relatively quick reversals higher.


JPY crosses gave back some gains after surging overnight from last week's lows. USD/JPY lost -50 bps into the 100.15 mark and the 100.00 area remains vulnerable while the volatility in US stocks continues. EUR/JPY meanwhile tumbled -85 pips and was sitting near 1.3655 as NY trading kicked off.

Nothing notable in terms of economic data today and the markets will be keenly awaiting developments in the seemingly never ending government plans to snap the credit market out of its current funk. As of this morning, credit spreads continue to suggest a very tight credit market environment. Not until these begin to contract in a very material way will we get the all-clear sign that things have really begun to improve.

Upcoming Economic Data Releases (NY Session) Prior Estimate

* 10/13 14:15 GMT GE German Economy Minister Glos Gives Statement

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.