An unexpected rejection of the Wall St. bail-out bill equaled over a trillion dollars in losses and some of the equity markets’ biggest losing days in modern history. As we anticipated, currency markets reacted with heavy selling of risk-associated currencies. Yen and commodity pairs pushed lower into the Euro session which then pulled back the bear run on news of rising US market futures.
As investors have their ears glued to CNBC and their fingers placed right over their sell button, volatility should continue on constant news of a possible bail out being re-introduced or again failing. We do expect the market to rally some of Monday’s 777 point losses over the next couple of sessions, but a continued outlook of credit crisis simply has no basis to change until intervention.
Be warned: These markets are not for the thin-skinned trader.
USDJPY – Found its way down to the lows around 103.50 before being reversed on the now 200+ point rise in DOW futures. USDJPY is currently at 105.08 and we are flat as we await a new range to be set.
EURUSD – The pair spiked over 100 pips on initial news of the bill being rejected, but pulled back and found its way lower during Asia. Tight consolidation is expected as we, along with most investors, await an opportunity to find a direction. Buying above 1.4570 and selling below 1.43.
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John Rowa
Executive Director of Trading
+1 951 823 0686 - Tel
+1 951 823 0687 - Fax
JRowa@IntegrityFXllc.com
Integrity FX, LLC
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Daily Trading Outlook - 09-30-2008
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