Coordinated Worldwide Emergency Interest Rate Cuts
Coordinated Worldwide Emergency Interest Rate Cuts
U.S. Dollar Trading (USD) in an extreme move central banks around the world cut rates in a coordinated fashion to try and restore some confidence in the markets. With the Nikkei down 10% and European stocks following the lead the bold move did stem the selling for a short while. The bounce was brief though and stocks resumed their downtrend to end in the red. The USD lost heavily against safe haven currencies and gold but was able to make gains against higher yielding pairs. Fed Funds Rates cut to 1.50% from 2.00%. In the U.S. share markets, the NASDAQ was down 14 points (-0.83%) and the Dow Jones was down -189 points (-2.00%). Crude Oil closed down +$1.11 ending the New York session at $88.95 per barrel. Looking Ahead, weekly jobless claims are expected to moderate at 475K vs. 497K previously.
The Euro (EUR) received a boost from the EU 0.5% rate cut to 3.75% from 4.25% as markets risk appetite picked up large amounts of EUR/JPY was bought. Stocks were unable to maintain gains though and the Euro fell back from highs. German Industrial Production jumped to 3.4% after stronger factory orders on Tuesday. Overall the EUR/USD traded with a low of 1.3544 and a high of 1.3743 before closing the day at 1.3640 in the New York session. Looking ahead, August German Import prices -4%.
The Japanese Yen (JPY) was the main winner as USD/JPY broke below 100 and all the crosses came under severe pressure as the Nikkei lost 10%. Coordinated rate cuts did provide some support but this proved fleeting and the Yen finished the day on a strong footing but somewhat overbought. Overall the USDJPY traded with a low of 98.60 and a high of 101.70 before closing the day around 101.60 in the New York session.
The Sterling (GBP) traded in a volatile fashion with multiple factors affecting price action. The UK announced a major $350 Billion bank rescue passage. This was quickly overshadowed by coordinated global rate cuts. UK cut rates 0.5% to 4.5% from 5.0%. The GBP recovered with stocks but was very weak going into the US close as stocks capitulated. Overall the GDP/USD traded with a low of 1.7275 and a high of 1.7660 before closing the day at 1.7520 in the New York session. Looking ahead, August trade balance expected at -7.6B.
The Australian Dollar (AUD) was ripped apart from a huge sell order out of the US. The AUD broke below 70 and didn’t stop until the low 64’s. A brief recovery was seen on the Interest rate announcement but the mood is grossly bearish and breaking records for the size and scope of the moves. Overall the AUD/USD traded with a low of 0.6439 and a high of 0.7156 before closing the US session at 0.6711. Looking ahead, September Employment change expected at 0 and the unemployment rate expected to edge higher to 4.3% from 4.1%.
Gold (XAU) broke above $900 as risk aversion soared on crashing markets. Investors are flocking into the precious metal. Overall trading with a low of USD$920 and high of USD$879.90 before ending the New York session at USD$909 an ounce.
Easy Forex
http://www.easy-forex.com
Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Sorry, the comment form is closed at this time.