Markets Plunge for a second day ignoring Bernanke Rate Cut Hint
U.S. Dollar Trading (USD)
U.S. Dollar Trading (USD) gave up some of the recent gains seen on Monday as Federal Reserve Chief Bernanke hinted at future rate cuts given the recent market deterioration. Consumer Credit M/M fell -7.9B vs. +5.6B forecast. Bernanke also noted that the ‘outlook to growth has worsened’ and this sent stocks tumbling lower. In the U.S. share markets, the NASDAQ was down -108.08 points (-5.11%) and the Dow Jones was down -508 points (-5.11%). Crude Oil closed up +$2.25 ending the New York session at $90.06 per barrel. Looking Ahead, August Pending Homes Sales expected at -1.5%.
European Euro
The Euro (EUR) recovered off recent lows as the market saw the selling overdone. The rally in Oil helped the Euro as did some steady buying in EUR/JPY before stocks crashed again removing that support. German Industrial Orders jumped unexpectedly to 3.6% from -1.4% previously. Overall the EUR/USD traded with a low of 1.3481 and a high of 1.3743 before closing the day at 1.3620 in the New York session. Looking ahead, German Industrial Output is expected at -0.1% vs. -1.8%.
Japanese Yen (JPY)
The Japanese Yen (JPY) came off highs when the RBA cut rates -1.0% and equities pared their losses. The bounce continued into Europe but as equities turned negative so did the crosses and the yen gained across the board. As US stocks dropped 5% risk aversion reared its head and the Yen has been the safe haven of choice. The Bank of Japan held rates at 0.5% although there was mention of downside risks to growth. Overall the USDJPY traded with a low of 101.06 and a high of 103.30 before closing the day around 101.60 in the New York session.
Pound Sterling (GBP)
The Sterling (GBP) recovered from year lows seen on Monday as bargain hunters jumped in and USD gave up some of its gains. Bernanke also gave the pound a boost as he reopened the door on US rate cuts with his speech late in the US session. Heavy GBP/JPY selling capped gains in the US close. Overall the GDP/USD traded with a low of 1.7320 and a high of 1.7660 before closing the day at 1.7520 in the New York session.
Australian Dollar (AUD)
The Australian Dollar (AUD) had an extremely volatile day with the market gaining off the extreme reaction lows on Monday. The RBA slashed rates by 1% and sparked a knee jerk 2 cent sell off before regaining 3 cents on improved risk sentiment. Later in the US session as stocks reversed direction the AUD was pushed back to lows. Overall the AUD/USD traded with a low of 0.7000 and a high of 0.7355 before closing the US session at 0.7100. Looking ahead, Consumer Sentiment previously at 7%.
Gold
Gold (XAU) continued to make gains as US stocks hit new multi year lows and risk aversion spiked higher. Overall trading with a low of USD$857.95 and high of USD$890.50 before ending the New York session at USD$889 an ounce.
Technical Analysis: Markets Plunge For A Second Day
Euro (EUR)
Euro – 1.3575 : Initial support at 1.3361 (Aug 16 2006 low) followed by 1.3319 (61.8% retrace 1.1639 to 1.6038). Initial resistance is now located at 1.3773 (Oct 6 high) at followed by 1.3907 (Oct 3 high).
Yen (JPY)
Yen – 101.50 : Initial support is located at 100.24 (Oct 6 low) followed by 100 (Key level). Initial resistance is now at 105.43 (Oct 6 high) followed by 106.96 (Sept 29 high).
Pound Sterling (GBP)
Pound – 1.7470 : Initial support at 1.7231 (Mar 2006 low) followed by 1.7131 (Dec 2005 low). Initial resistance is now at 1.772 (Oct 6 high) followed by 1.7839 (Oct 3 high).
Australian Dollar (AUD)
Australian Dollar – 0.7090 : Initial support at 0.6990 (Oct 6 low) followed by the 0.7676 (June 2004 low). Initial resistance is now at 0.7743 (Oct 6 high) followed by 0.7818 (Oct 3 high).
Gold (XAU)
Gold – 883 : Initial support at 820 (Oct 3 low) followed by 808.82 (61.8% retrace 737.00 to 925.00). Initial resistance is now at 893 (Oct 1 high) followed by 914.75 (Sep 30 high).
If you have enjoyed this post please feel free to Subscribe to the Free Forex Trading HQ Newsletter.
We recommend trading forex with Easy-Forex.
