Finexo Market Analysis

Tuesday, September 23, 2008

• FX: EURUSD blasting higher. Wild discussions about Bernanke/Paulson Plan…

• Fixed Income: 10-year contracts ranging or edging slightly lower. Fed’s Funds Futures indicating a 34% chance of a 35 bps. cut at the 29th of October FOMC meeting.

• Stocks: European session down by around 2%. US down by 3-4%. Asia down by 2%. Nikkei closed.

• Commodities: Gold up, trading around $900. Silver up, trading $13.4. Crude Oil up, trading $109.

• A combination of short-expiring ahead of October expiry, USD-weakness and news of higher imports from China have caused the largest single-day rise in crude prices, with the October contract closing at $120.92, or up 16%. At the same time, November contract saw Monday trading close over $110, or up nearly 7%.

• Details in the (so far) $700B Bernanke/Paulson Plan favour Morgan Stanley and Goldman, stories show. Critics state that the plan is far too cheap to have any impact and the real issue has moved from illiquidity to insolvency.

• Precious metals regaining some of the lost ground from the August-September sell-offs and most risk indicators are flashing and beaming. Only EURCHF not responding like it should in this environment (we should see massive unwinding).

• The USD is selling off dramatically. The USD Trade Weighted Index briefly touched the 50% Fibonacci retracement from the bottom in mid-July to the top in mid-September. The rapidly deteriorating US fundamentals and desperate nationalization of bad debt might lead to a break soon. These days, anything can happen…


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