Bears in Control of Market

U.S. Dollar Trading (USD) good economic news was overlooked with the market gripped in selling mode. September Manufacturing PMI at 51.6 vs. 50.6 previously. Stocks finished down over 2% with rallies proving short lived. In US stocks, DJIA -258 points closing at 10655, S&P -32 points closing at 1099 and NASDAQ -79 points closing at 2335. Looking ahead, August Factory Orders forecast at 0% vs. 2.4% previously.

The Euro (EUR) the Euro was the worst performer leading the market lower with Greece set to miss both 2011 and 2012 deficit targets and pressure on European banks mounting the outcome is becoming more unclear. The ECB meeting is forming as a key risk event with some analysts speculating a 50bps rate cut may emerge to counter the recent slowdown and turmoil. Looking ahead, August PMI forecast at -0.2% vs. 0.5% previously.

The Japanese Yen (JPY) the market bought the Yen aggressively with USD/JPY falling as well with weakness in crosses overwhelmed. EUR/JPY ended at Y101 within striking distance of the key Y100 which is expected to provoke talk form Japanese Officials. AUD/JPY as the risk trade was under heavy selling pressure as well breaking below Y73.

The Sterling (GBP) was heavy as USD strength spread throughout the markets. The losses were contained however with a move below 1.5500 found support 1.5450. EUR/GBP continues to plummet falling to 0.8550 and is providing a minor support. GBP/JPY found support at Y118. Septembers Manufacturing PMI supported at 51.1 vs. 49.4 previously in a surprising reading back above expansionary territory.

The Australian Dollar (AUD) the Aussie was under pressure from multiple angles with concerns about Chinese property and crashing commodities making the risk currency one of the worst performers overnight. Support is seen at 0.9480 but the downtrend is well entrenched. Update August Trade Balance 3.1bn vs. 1.9bn forecast. Looking ahead, RBA forecast to hold at 4.75%.