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Dollar drops versus Japanese yen and Swiss franc as U.S. Congress rejects bailout package by AceTrader
By: - 30-09-2008
0votesUpdating time: 29/09/2008 21:28 GMT
The greenback fell sharply against the Japanese yen and Swiss franc onrisk aversion as the U.S. House of Representatives rejected the $700billion Wall street bailout package by a vote of 228-205 together withthe selloff in global stock markets.
Dow Jones Industrialaverage index tumbled by 777 points to 10,365, its biggest intra-daydecline ever. The U.S. currency weakened from 106.97 to 104.01 and from1.1088 to 1.0813 against the Japanese yen and Swiss franc respectively.Euro fell sharply from 155.10 to 150.14 and from 1.5945 to 1.5688versus Japanese yen and Swiss franc respectively.
The singlecurrency started to tumble in European session as authorities wereforced to rescue banks in several countries. Belgian, Dutch andLuxembourg governments nationalized parts of banking and insurancegroup Fortis and agreed to inject 11.2 billion euros into the financialgroup. Euro fell sharply from 1.4635 to as low as 1.4303 on Monday andthen briefly rebounded to 1.4572 in U.S. session on the rejection ofU.S. bailout package before falling again on the selloff in crude oilprices.
Sterling dropped from 1.8420 to a 10-day low of1.7960 after the government nationalized the mortgage lending businessof Bradford & Bingley, with the retail branches and deposits soldto Spanish bank Santander. Australian dollar and New Zealand dollarweakened against U.S. currency from 0.8350 to 0.8002 and from 0.6887 to0.6705 respectively.
Interest-rate futures indicated a 72%chance that the Fed would reduce the 2% target lending rate by ahalf-percentage point by its October 29 meeting, compared with 32% oddsa day ago. There was a 28% chance policy makers would cut by aquarter-percentage point.
Tuesday will see the release ofU.K. Gfk survey, Japan’s industrial production, German unemploymentrate, U.K. current account and GDP, eurozone HICP, Chicago PMI andconsumer confidence.
Next Analysis: DAILY TECHNICAL OUTLOOK ON EUR/USD by AceTrader
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