Stops and active selling drive majors to new lows - Morning Session - GMT
Forex Pros | Oct 06, 2008 08:00PM ET
Today’s US Dollar Trading
• Stops and active selling drive majors to new lows
• USD/JPY falls to parity
• Volumes only moderate
Overnight Preview
• More follow-on selling expected
• USD likely to consolidate
Looking Ahead to Tuesday
All times EASTERN (-4 GMT)
• 11:00am USD FOMC Member Stern Speaks
• 1:15pm USD Fed Chairman Bernanke Speaks
• 2:00pm USD FOMC Meeting Minutes
• 3:00pm USD Consumer Credit m/m
Summary
Traders are buying USD in size as flight to quality fears pervade a global meltdown in the financial sector. Equities were off over 800 points in late trading as the DJIA drops under the 10,000 level; NASDAQ off under the 1800 area leaving that market at a ten-year low. Oil off as well trading under the $90.00/BBL level as traders fled commodities as well. Of course the USD rallied as value was re-adjusted leaving the major currencies falling hard with the exception of USD/JPY; USD/JPY dropped over 600 points for a low print at 100.22 as equities fell off leaving the Yen as the reserve currency today. GBP and EURO fell hard as well with both pairs well below technical levels considered important for continued gains against the USD suggesting that the USD has more upside to go; although that is remote as there are few buyers left after a move like this. GBP fell to a low print at 1.7335; EURO low prints at 1.3453. Traders note that sentiment is so overwhelmingly fearful of counterparty risk that there are no buyers for the majors despite price levels that only six months ago would be considered dirt-cheap. In my view, the USD is acting as a flight-to-quality recipient to the point that no one will buy anything else. In a situation like this it is almost impossible to find a bottom in the majors as traders have little to base a price fix on because the markets are trading with so little common-sense; everyone is panicking to the point that no one will let go of their USD and will only look to buy more. I think it is important to remember that in a trading environment like this there will be some incredible values coming around the block soon. When the process of USD flight to quality ends the USD will become more vulnerable than it likely has been in 50 years. No matter your personal point of view today, this rally in the USD is not sustainable in my view and you need to be ready to sell the Greenback soon.
In association with
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.