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The relationship between slumping world equities, record high TED spreads (LIBOR minus T-bill) and multi-year highs in low-yielding currencies is bolstered by a break in confidence across the equity, credit and foreign exchange markets. Our Thursday morning piece sent to clients titled "Sterling Still the Major Loser" preceded further losses in the currency as GBPUSD broke to 5-year lows at $1.6784. Sterling also slumped against the Swiss franc, hitting 12-year lows at 1.900 as the Swiss franc

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The coordinate rate cuts failed to halt the uncertainty over the global crisis, which has accelerated the risk aversion strategy. The USD, the JPY and Gold became safe heaven, while the GBP and the EUR remained very weak. The GBP/USD hit its 5 years lowest at 1.6776 in the early European session on Friday Oct 10. The GBP/JPY finally found a support at 165.91. Tense situation still remains in the global financial market. Let's wait and see outcomes of the G7, which might open a new chapter in

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For the first time since March 2003, the Dow Jones Industrial Average broke 8000 at the open of the US markets. However just as quickly as stocks dropped 600 points, it recovered more than half of its losses in the first 15 minutes of trading. The capitulation followed by the major short squeeze suggests that we may have seen a near term bottom. This type of volatility drove the VIX index to a record high of 70. Currency Traders Waiting for the Buying Opportunity Interestingly enough, we have

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Quotable “A coward dies a thousand deaths, a hero only one.â€�     William Shakespeare FX Trading – Will our hero engender a bounce? I guess that little coordinated interest rate cut thing didn’t do the trick.  But don’t despair citizens.  Right now he’s strapping on his cape to prepare for yet another episode of “The US Treasury Saves the Worldâ€� news conference to explain why the latest scheme hatched in the last 15-minutes will be just the ticket.  Our guess

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Equities plunged yesterday and overnight, starting with a late-day selloff in the U.S. that left the Dow down another 7% that was followed by even larger drops in Asia and Europe. This continued weakness in equity markets pushed the Japanese yen towards its biggest weekly gain against the dollar in a decade and helped to strengthen the Swiss franc as investors flocked to lower-yielding assets. The market's flight to quality also led emerging market currencies, perceived as too risky to hold,

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This week Iceland has been thrown into its worst financial and economic crisis ever with the collapse of its financial markets. The "Geyser Crisis", is a result of the combination of a massive increase in Iceland's foreign debt, a very leveraged expansion of the Icelandic banking sector abroad, and the global credit crunch. It is estimated that the balance sheets of Icelandic banks were in total around 10 times larger than GDP in Iceland before the collapse. The macro implications of the

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Comment : Lena Manousarides [ lena@fxgreece.gr ] There is the old saying that “actions speak louder than words� and that is what we can say about the situation which we experience at the moment. The current trading climate all around the world is chaotic and traders are wondering what the next minute will bring. The fear and uncertainty is at high levels once again and the fact that everyone is panicking helps to the high volatility that we see in currencies. Sterling is the looser of the week

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Market Brief The Usd was stronger against all the G10 currencies except the Jpy in Asian Session, as equity markets came under significant selling pressure. The EurUsd fell from 1.3695 to 1.3501, while the UsdJpy slid from 100.84 to 98.80. The Gbp felt the brunt of investor's fears, as the cable collapsed from 1.7257 to 1.6796. Yesterday's massive losses carried over into the Asian session, with the Nikkei -9..62% & Hang Seng -7.03%. European stock futures are pointing to a negative

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Previous session overview On Thursday, the dollar and the euro declined against the yen as another late drop in U.S. stock markets ran roughshod over signs of optimism earlier in the day regarding the global financial crisis. The euro was again more sensitive to the high level of risk aversion/panic and EURUSD gradually drifted lower throughout the session. The pair set intra-day highs in the 1.3785 area before noon in Europe, but closed the session near the intra-day lows at 1.3604, compared

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Executive Summary It Appears That a Global Recession is Likely Global real GDP growth averaged nearly 5 percent per annum between 2004 and 2007, the strongest four-year period of growth in decades. However, real GDP growth rates have slowed in most countries this year, and we look for further deceleration in 2009. Indeed, we project that global GDP will grow only 2 percent in 2009, the slowest year for global growth since 1993. If credit markets remain frozen for a prolonged period of time,

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Headlines Currencies: EUR/HUF above 270! Fixed Income: Hungarian bond market hit by massive sell-off Currencies The massive sell-off in equity markets in the wake if the coordinated rate hike marks the next, possibly most dramatic stage of the financial turmoil to date. Coupled with rumors on the nationalization of OTP which spurred the panic selling of the HUF, the impact on the zloty was profound, to say the least. The EUR/PLN soared from 3.42 early on Thursday to 3.65 early today. Low

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News and views Worries over GM and Morgan Stanley resurface. Early rumours that the G7 economies are set to provide a blanket guarantee for all interbank lending lifted sentiment and helped the Dow post a quick 180pt rally in opening trade. However, the recovery proved fleeting. GM tumbled as much as 22%, heading towards its lowest close in 58 years on analyst reports that the company may not receive $25bn in Government loan guarantees in time to help them survive the crises in the credit and

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London, 10 October 2008 - Cash generating long liquidation weighed on the precious complex for much of Thursday, with gold drifting back to $880. However the Dow’s collapse below 9,000 triggered aggressive buying in the after-market session, propelled the metal to $925/oz, and has left the metal well placed for an end of week grand finale. Global equity markets staged an initially bullish reaction to Wednesday’s co-ordinated rate cuts however a further tightening of borrowing rates and

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Among Asian countries, South Korea is a prime potential victim of the current global credit crunch. Debt leverage among domestic households and companies has soared, domestic commercial banks are dependent on short-term wholesale and foreign funding and the current account has deteriorated on the back of higher crude oil prices. Hence, we expect the South Korean economy and KRW to underperform in the current global financial deleveraging environment.  However, South Korea’s external

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The US dollar rose sharply against the yen and slightly weakened against major currencies on Thursday as some calm returned to financial markets a day after coordinated global interest-rate cuts. The round of official interest rate cuts from the world’s leading central banks on Wednesday triggered a temporary bounce in risk appetite in the markets, prompting to investors to buy higher-yielding currencies again. The euro is up against most major currencies and also regained some ground against

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The US dollar ended the day on a stronger note as an end-of-day selloff in the US stock markets triggered yet another round of flight-to-safety. US Dollar Up Despite Dismal Jobless Claims, Wholesale Sales – What Will Friday’s G7 Meeting Bring? Euro Loses Ground Despite Hawkish Comments, Swiss Franc Struggles To Recover British Pound Drops to Nearly 3-Year Low - Buying Opportunity? US Dollar Up Despite Dismal Jobless Claims, Wholesale Sales – What Will Friday’s G7 Meeting Bring? The US dollar

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Oct. 10, 2008 (Allthingsforex.com) – The U.S. Retail Sales and a sequence of Consumer Price Indexes scheduled for release from several major industrialized nations will make inflation and consumer spending be the main themes of the week ahead. In preparation for the new trading week, here is a quick look at the most important economic events that every currency trader should pay attention to. Sunday, Oct. 12 will begin the trading session with New Zealand’s Retail Sales, the main measure of

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While, the service sector does account for well over 80% of overall economic activity, industrial production often provides a very timely indicator implying the end of the business cycle and the onset of a recession. The pro-cyclical nature of the report provides a well-timed and sensitive indicator of the current rate of growth in overall output. We expect that the September industrial production report based on our forecast of a -1.4% print will confirm other grim data that the market has

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Key News • Asian central banks on Thursday joined their western counterparts in co-ordinated cuts to interest rates in an effort to curb the risk of the credit crisis sparking a severe global recession. (FT) • Japan said on Thursday it would consider any request from South Korea for assistance, after the Korean won sank to a 10-1/2-year low, but a spokesman said Seoul had not yet asked for Asian crisis talks.   US Economic Events (WSJ): 8:30a.m. Initial Jobless Claims For Oct 4

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The markets had mixed reactions to yesterday's unilateral central bank rate cuts. U.S. and Asian equity markets closed up to 2% lower but European markets are mostly positive this morning. The dollar lost some ground against the euro as investors gained confidence that the European Central Bank will act as necessary to prevent further economic troubles. ECB President Trichet emphasized the bank's willingness to take aggressive action in a statement yesterday following the 0.50% cut in policy

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Yen due for a correction The Bank of Japan held interest rates at 0.50% and did not participate in the global interest rate cuts on Wednesday, although it did consider a cut in the emergency Lombard rate. The yen initially retreated following the rate cuts, but it resisted heavy selling pressure as safe-haven demand was still robust and the dollar dipped again late in US trading. The domestic Japanese data was sharply weaker than expected with a 14.5% decline in core machinery orders for

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Market Brief The Dollar and Yen are weaker as Asian equities opened higher on the back of a unified rate cut by four regional banks. The Bank of Korea and Taiwan cut their rates by 25 basis points, while Hong Kong cuts to 2%.China cut it’s rates yesterday, in anticipation of the coordinated European cut. The Nikkei 225 initially rose by 1%, before giving them back, now trading -0.4%, BoJ is steadfast and holds at 0.5%. The Hang Seng is up 2.7% - financials leading gainers as bid to ease up

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Headlines Currencies: CZK weaker despite a global rate cut Fixed Income: CNB likely to cut today by 25 bps Currencies The Polish zloty had an extremely turbulent session as the EUR/PLN struggled to stay within the 3.40-.50 range yesterday. Eventually, the zloty managed to regain confidence following a violent correction early in the session, which brought the pair to a fresh 6 month highs. The coordinated CB rate cut was positive for sentiment and even though we doubt whether it will be enough

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Previous session overview On Wednesday, the dollar declined against the euro as a coordinated rate cut by major central banks signaled that European monetary authorities are finally taking steps to alleviate their economic woes. The world's major central banks took a historic step yesterday, easing benchmark rates by 50bp in a coordinated announcement at the start of US trading. The Euro received a boost from the EU 0.5% rate cut to 3.75% from 4.25% as markets risk appetite picked up large

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London, 09 October 2008 - Sentiment remained extremely volatile in the financial markets yesterday as Finance Ministers continued to battle against the credit crisis, however gold remained in a bullish mood as safe-haven demand flocked to the market, with gold setting all-time records in Sterling, Euro’s, Swiss Francs, Australian Dollars and Indian Rupees. Holdings in the SPDR gold ETF also reached a record 763.9-tonnes as safe-haven demand emerged. Reflecting the global effect of the crisis

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In another attempt to calm the global financial markets, the US Federal Reserve led a coordinated round of global official interest rate cuts on Wednesday, lowering the federal funds rate half a percentage point, as did the European Central Bank, Bank of England and Swiss, Canadian and Swedish banks. The US dollar fell against major currencies, while the yen surged as investors questioned whether coordinated global rate cuts by central banks were sufficient to free up the credit market.

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News and views Global central banks coordinate policy and ease by 50bp. The world’s major central banks took a historic step today, easing benchmark rates by 50bp in a coordinated announcement at the start of US trading. The US Fed, the European Central Bank, the Bank of England, the Bank of Canada, Sweden’s Riksbank and the Swiss National Bank issued a joint statement citing the recent “intensification of the financial crisis� and a “reduction in inflationary pressures� as the reasons for the

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The US dollar was mixed versus the majors on Wednesday amidst global central bank rate cuts early in the morning, including a 50 basis point reduction to the fed funds rate. US Dollar: Does the Federal Reserve Have Any Other Tricks Up Their Sleeve? Euro Holds Its Own As ECB Signals Rate Cut Is a One-and-Done Deal British Pound Tumbles As BOE Slashes Rates, UK Announces £50 Billion Bailout Japanese Yen: Odds Remain Stacked In Favor of Strength US Dollar: Does the Federal Reserve Have Any Other

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10/7/2008 9:50 PM: EUR/$..1.3582 $/JPY..101.20 GBP/$..1.7508 $/CHF..1.1403 AUD/$..0.7070 $/CAD..1.1037 Fed’s Bernanke Tips Hat to Rate Cut The global financial crisis continues to drive the volatile movements in the foreign exchange market, with the yen and dollar benefiting from safe haven flows amid heightened risk aversion. The US equity bourses extended its dive for another session with the Dow Jones losing 5.1% to 9,447.11, the Nasdaq plunged 5.8% to 1,754.88 and the S&P 500 shredding

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EURO The euro rallied higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3755 level and was supported around the $1.3540 level.  Central banks enacted concerted interest rate cuts today to support their economies.  The Federal Open Market Committee voted unanimously to reduce its federal funds target rate by 50bps to 1.50%.  The FOMC reported “inflation expectations are diminishingâ€� and said the “unprecedented joint actionâ€� was to

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Europe was all but written off on Tuesday when Gordon Brown, the UK prime minister announced late in the day that £50 billion (about $85 billion) may be injected into several of the biggest banks. The details known so far are that eligible banks can issue preference shares to the government; the Bank of England makes another £200 billion of liquidity available in the short-term markets; and a further £250 billion of government guarantees are issued to help banks in their funding needs. We have

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• The Rupee pared most of its losses after the US Fed and 5 other central banks cut rates together. The USD/INR pair ended at 48.00 from 47.88 yesterday.  • The 6-month and 1-year forward premium was at -0.64% and -0.23% as compared at -0.84% and -0.19% yesterday.  • The Japanese Yen depreciated broadly after coordinated interest rate cuts by the US Fed and European and Chinese Central banks, which could help reduce risk aversion in the near term. EUR/USD was at 1.3706 from 1.3693

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Key News • Yen Rises to Three-Year High on Concern Interest-Rate Cuts May Fall Short (Bloomberg) • Pending Home Resales in U.S. Increase 7.4% as Foreclosures Reduce Prices  (Bloomberg) • British Banks Get $87 Billion Government Lifeline to Save Financial System (Bloomberg) Quotable “The avowed mystics held the arbitrary, unaccountable “will of Godâ€� as the standard of the good and as the validation of their ethics. The neomystics replaced it with “the good of society,â€� thus

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Global Coordinated Rate Cut The US Federal Reserve along with the Bank of Canada, Bank of England, the European Central Bank, Sweden Riksbank and the Swiss National Bank acted in concert to reduce short term lending rates in pre-market hours this morning. By a unanimous decision the Fed lowered its target rate for the federal funds rate by 50 basis points to 1.5% and reduced the discount rate by an equal measure to 1.75%. While it is certain that the FOMC did not respond to the overnight

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In a coordinated move aimed to ease the effects of the global economic crisis, the Fed, European Central Bank, Bank of England, Bank of Canada, and Sweden's central bank each cut interest rates by half a percentage point this morning. The central bank of China took separate action and lowered its key lending rate for the second time in three weeks, and the Swiss National Bank will also reduce rates. After this joint move, the dollar declined against the euro and the Japanese yen as investors

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USD -- All financial markets were roiled last week, and this morning, as the flames of volatility were stoked by fear, speculation, and uncertainty stemming from unprecedented market events and developments. The Dow Jones Industrial Average saw its single largest point drop in a day (-778 points) last Monday after the US House of Representatives failed to pass legislation approving the historic $700B “bailout plan� proposed by the US Treasury. Currency markets followed suit, as the greenback

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Bank rescue underpins Sterling Sterling weakened sharply in Europe on Tuesday as there were renewed fears over the UK banking sector with particular fears surrounding the Royal Bank of Scotland. The UK currency dipped to lows near 1.73 against the dollar before a rebound. The market turmoil will increase fears that the already very weak UK economy will deteriorate further. There will be very strong pressure on the Bank of England to act this week with markets increasingly speculating over at

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Statistics released by the governmentsubsidized program “KAFALAT� uncover a sizeable increase in the number of guarantees extended by Kafalat for the first eight months of 2008 to 606. Registered Construction Permits In August 2008 According to the Order of Engineers' statistics, Lebanon’s registered construction permits amounted to 750,675 sqm in August 2008. Balance Of Trade Up To July 2008 On the current account side of the balance of payment, the Higher Customs Council revealed that

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What a week this one is turning out to be, with NIKEI dropping almost 1000 points last night and DOW JONES still trading well below 10.000!The market sentiment remains negative and there is chatter amongst analysts that we haven’t seen anything yet! Bernanke spoke in Washington late last night and told investors that the economy is suffering at the moment and the damage is much worse than previously estimated (nothing new there) so the bank will have to act accordingly. He also said that

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News and views Fed comments hit USD. Markets were quick to pounce on comments from Fed Governor Bernanke that the “outlook to economic growth has worsened� and that Fed will “need to consider whether the current stance of policy remains appropriate.� This was taken as a clear sign that the Fed Governor has now fully about faced the outlook for monetary policy as the credit crises continues to deepen and is now prepared to cut rates. The USD weakened on the news, and EUR raced to a high of