London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Nov 18 08 13:19 GMT |

The buck rallied against the majors in London trading as risk aversion was once again in vogue. Global equity marts remained weak with Asia shedding about -3.5% and European bourses down about -2.0% thus far. Economic data was light with the only noteworthy release being UK inflation. Consumer prices fell more than estimated and were running at a 4.5% annual rate in October after a 5.2% run-rate the prior month. This was the steepest decline in about 11 years and leaves the door wide open for the BOE to slash rates further. Risk trades were pared in the session and EUR/USD lost about -20 pips into the 1.2620/30 zone. USD/JPY fell about -40 points to 96.20/30 while EUR/JPY saw a sharper -70 pip loss and was sitting near 121.40/50 ahead of the open in NY. The price of oil continued its pullback and the commodity remained firmly below $55/bbl. This helped boost USD/CAD about 45 pips to just above the 1.2300 area. The 1.2350 level looks like the next trigger for upside here. The main event in the NY session is the testimonies of Bernanke and Paulson at 0930ET. They will be discussing the financial rescue and are likely to provide equity markets with plenty of nuggets to trade on. If they come off as more dovish than usual we would expect stocks to dip well below where futures are currently indicating (about -2.0%) and for JPY-crosses to head lower on the follow. Stay tuned. Upcoming Economic Data Releases (NY Session) Prior Estimate 11/18/2008 13:30 GMT US Producer Price Index (MoM) OCT -0.40% -1.80% 11/18/2008 13:30 GMT US PPI Ex Food & Energy (MoM) OCT 0.40% 0.10% 11/18/2008 13:30 GMT US Producer Price Index (YoY) OCT - - 6.20% 11/18/2008 13:30 GMT US PPI Ex Food & Energy (YoY) OCT 4.00% 4.00% 11/18/2008 14:00 GMT US Net Long-term TIC Flows SEP $14.0B - - 11/18/2008 14:00 GMT US Total Net TIC Flows SEP -$0.4B - - 11/18/2008 14:30 GMT Paulson, Bernanke Testify on Financial Rescue 11/18/2008 15:00 GMT GE ECB's Stark Holds Speech in Frankfurt 18-Nov 11/18/2008 15:45 GMT UK BOE's Besley to Make Speech 18-Nov 11/18/2008 18:00 GMT US NAHB Housing Market Index NOV 14 14 11/18/2008 18:30 GMT UK ECB's Trichet Holds Speech in London 18-Nov 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.