Equities Sink For Second Straight Session, Sterling Slides

Daily Forex Fundamentals | Written by AC-Markets | Nov 21 08 01:14 GMT |

Market Brief The dollar rallied in today's trading session, as the risk aversion overtook the marketplace. The EurUsd fell 35 pips to the mid 1.24 range, while the UsdJpy dropped 200 pips to the high 93 price area. The GbpUsd declined 225 pips to the low 1.47 level, as Traders selloff high yielding assets. Equity markets tanked in the US with the Dow down an additional 5.5% or 444pts to 7552. European stock indexes were also negative with the SMI down 4% or 217pts, along with the FTSE, CAC, and DAX down more than 3% each. Bond yields collapsed as the 2yr yield decreased to its lowest level in history at .97%. The 10yr yield tightened by 31bps to 3%, and the 30yr retracted 42bps to 3.4%, both of which a strong representation of bearish sentiment among investors. Commodities were negative across the board, with oil down 10% to $48.70bbl, and gold off .1% at $745oz. An EU fiscal stimulus package may be in the works, as policymakers look for alternative methods to stimulate growth. A German Economics Minister stated that the package would equate to 1% of GDP or 130 billion Euros. The plan would be implemented in combination with further easing in monetary policy, sparking further weakness in the currency as investors deleverage euro denominated assets. In the UK, retail sales came in better than expected down 0.1% vs. 0.9% est. The positive economic news had little effect on Sterling trading, as the FX markets move more in tandem with fluctuations in risk aversion versus fundamentals. Jobless claims came in at 542k, its highest level in several years and worse than the projected reading of 505k. US economic conditions continue to worsen, and the level of fear among market participants is heightened by record volatility and substantial losses in equity markets. A serious degree of concern surrounds Citigroup as the stock price slid 50% in the last 5 days of trading. Being that Citigroup is one the US largest banks, their demise would add further instability to the battered financial markets. Dollar strength is amplified due to heavy buying in Treasuries, this trend is likely to wane when we move towards a recovery. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.