Daily Trading Outlook 10-06-2008

[pip_pro]

Equity markets globally have sold off as the reality of a crisis-level lending crunch is crippling economies around the world. With the glamour of the “bailout plan” having already worn and investors unconfident in its potential effects, investors have pulled out of any of their risk, giving extreme rises to the Yen and Dollar.

Markets like to see forward and like to have stability, but with no solution in sight, risk appetite has completely come to a halt and safe plays such as the Dollar and the Yen have benefited from the risk aversion. We expect this trend to continue and potentially continue in a big way today as US equity markets are already looking at triple digit losses to open as Futures have fallen sharply. So, as today can be viewed as one of the most important trading days in the past two decades, our eyes are fixed keenly to market reaction and will look to play the risk aversion trade.

EURUSD – Falling like a rock toward our mark at 1.34, the Euro has become one of the most unpopular currencies in recent memory. We expect 1.34 to be reached within the next 48 hours and a breach could signal an even larger sell off that has very little support to slow it down.

GBPJPY – Just about any Yen-quoted pair is primed for huge losses and after falling 540 pips since Monday’s open, the Sterling leads the way. With GBPJPY now reaching into the 180 range, calling a bottom is like catching a falling knife. The pair has plummeted to decade lows and a break into the 170’s could find the GBPJPY and other Yen pairs picking up the pace of their selling off.

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John Rowa
Executive Director of Trading
Toll Free: 1-888-355-3855
Tel: +1 951 823 0686
Fax: +1 951 823 0687
JRowa@IntegrityFX.com
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