Wakeup Call: Automaker Bailout Plan Rejected In Senate Vote. Equities Turn Sour

Daily Forex Fundamentals | Written by Saxo Bank | Dec 12 08 08:20 GMT |

Yesterday evening The U.S. Senate voted against the bailout plan for U.S. automakers and which turned Asian equity markets sour and this will spill over into European equity markets as well Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment US Producer Price Index YoY (NOV) 13:30 0.2% 5.2% US Advance Retail Sales (NOV) 13:30 -2.0% -2.8% US U. of Michigan Confidence (DEC) 15:00 54.5 55.3 What's going on? The Senate rejected the $14 billion bailout plan for U.S. automakers – GM and Chrysler could run out of cash early next year. Stocks were massively down in Asia and Europe is set to open in very negative territory. Our CDS index for the top 100 US stocks is still at elevated levels at 130. Crude Oil extended losses after the majority of the U.S. senate failed to agree on bailout plan for the auto industry. USDJPY falls as U.S auto bailout fils in senate. AUDUSD and NZDJPY also drops on the back of this. US Treasuries rose, pushing yields to record lows, after the failure of the U.S senate to approve the bailout plan. FX FX Daily stance Comment EURUSD 0 Can it hold rally in equity meltdown? 1.3250 break first sign of weakness, then 1.3080. EURJPY 0/- Sell upticks for 116.00 test again. 120.00 is resistance area. USDJPY 0/- Has already fallen a lot…worth selling rallies for retest of lows GBPUSD 0/- Rally not convincing, prefer selling up against 1.5000 to see if 1.4880 falls again. USDCAD + Big sell-off now reversed and in rally mode. 1.2375 support. Looking for 1.3000 again Equities Equities Daily stance Comment DAX - Sell rallies towards 4586 with a stop above 4648 for a test of 4490. FTSE - Sell rallies towards 4266. Keep a stop above 4329 and target 4165. S&P500 - Nasdaq100 - Nikkei225 - Futures Commodities Daily Stance Comment Gold (XAUUSD) - Sell rallies towards 46.50 with a stop above 47.50 for a test toward 43.00 Silver (XAGUSD) 0 Key resistance again at 835. Needs 825 to look like a rally danger again. Support is 800 Oil (CLF9) - Quick sell for test below 10.00 on USD strength. Stop above 10.30 Options FX-Options Comment EURUSD Risk Reversals offered across the curve with much interest to buy low delta EUR call/USD puts. Option market believe in a weaker dollar. EURGBP Int. in upside EURUSD and still selling int. in upside GBPUSD make us believe mkt is short EURUSD and long GBPUSD. Gamma traders make EURUSD move higher than GBPUSD. Bullish EURGBP. USDJPY Vols up throughout the curve after USDJPY broke 90.00. Vols should come off and USDJPY back to range trading because of BOJ and exporters different interests. 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. 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