Wakeup Call: Financial Markets Under Even More Severe Pressure

Daily Forex Fundamentals | Written by Saxo Bank | Oct 07 08 07:57 GMT |

AUD getting creamed after surprise rate cut from RBA. Money Markets more tight than ever. Stocks collapsing yesterday, but showing some buying interest overnight, in anticipation of rate cuts. Calendar Today’s Major Economic Data Releases Name Time (GMT) Expectation Prior UK Indu Production YoY (AUG) 08:30 -2.0% -1.9% GE Factory Orders YoY (AUG) 10:00 -4.7% -0.7% US FOMC minutes (SEP) 18:00 - - What's going on? UK getting ready to put tax payers' money into banks (aka nationalization), according to Chancellor of the Exchequer, Alistair Darling. US Fed/Treasury considering to get into the unsecured lending market (i.e. commercial paper). This has never happened in the history of the Fed and the legal basis and ramifications are unclear. The RBA cut interest rates to 6.00% (i.e. -100 bps.). The expectation was 6.50%. ASX200 saw some support after the move (only stock index, which ended higher yesterday). AUD plummeting. Iceland's Prime Minister says that it cannot be ruled out that they will go bankrupt. Commodities are plummeting. Several of them were limit down in Shanghai trading. Only exception is precious metals, which are still holding the ground. DOW dropped to (and closed) below 10,000 for the first time since 2004. Carry Trades in massive unwinding. JPY is the king of currency markets. FX FX Daily stance Comment EURUSD 0 Downside pressure easing here – look at dip buying with stops below 1.3500 EURJPY 0 Yesterday may have been selling climax – tough to find decent risk/reward tho.. USDJPY 0 Buy on dips – support around 102.20 and then 1.0125. 1.0350 is resistance GBPUSD + Buy on dips, stops below 1.7460 for a try toward 1.7700 EURGBP + Watch the volatility – but yesterday’s downside overdone… Equities Equities Daily stance Comment DAX + Buy at the break of 5441. Target 5615. Keep a stop-loss at 5351. Will on rise on expected rate cut. FTSE100 + Buy at the break of 4669. Target 4980. Keep a stop-loss at 4587. S&P500 + Buy at the break of 1064. Target 1087. Keep a stop-loss at 1037. NASDAQ100 + NIKKEI225 + Futures Commodities Daily Stance Comment Gold (XAUUSD) - Gold making new highs vs. EUR, which is still under pressure. Buy dips. Silver (XAUUSD) + Neutral outlook. Note key support at 10.27. Oil (WBSX8) - Short at new lows with a stop above 90.50. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. 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