We´ve seen a lot of movement in the market this week. The NIKEI dropped almost 1000 points last night and DOWN JONES still trades down below 10.000. The overall feeling of the market remains negative.
Bernanke spoke in Washington late last night and clarified to investors the economy´s suffered greater damage than expected, so the bank will have to act accordingly. He also said the inflation has eased. These just means the bank will have to cut rates sooner rather than later. Markets reacted buying dollars and strengthening the currency against the euro.
European GPD and US pending home sales are the only important events to watch out for today. As volatility in the market reach its highest currencies are humping up and done on their values. This just reflects the general discomfort and uncertainty that feels in the market.
Investors are all over FED´s move to buy all commercial papers directly from eligible users, ad although it was meant to bring some stability to the market, it gave the opposite effect. The move was perceived as an act of desperation and an acceptance of the financial sector collapsing.
The EUR/USD trading move towards 1.3740 reversed in less than an hour. The pair´s still trading between the 1.35-1.38 range and only a break could take it to the next level. Contrary to all predictions, dollar has only strengthened as a result of later events. As long as risk aversion remains, dollar will stay strong vs. the euro.
ECB, BOE and FED are injecting money into the markets in a continuous attempt to bring stability. Still investors know they can be preparing themselves for the worse.
Another extraordinary move was seen all carry trades, as USD/JPY broke 100 due to risk aversion and GBP/JPY is moving fast and heavily towards 170.
As always, traders can take their chances in the chaotic market, or wait to see where it takes next.
Actually, I’m confused everything is telling me that USD/EUR trend is going up. But there is the interest rates issue. With US and all European central banks announcing reductions in their interest rates, I don’t know what to do. I think the best thing to do is stay put and hold.
The pair is def. in a upper possition right now, however with everything that´s going on in the globe´s economy, I´d advice to better wait for a real stability before making any significant moves
That’s actually the best thing to do right now. But if everybody stay still in the market the crisis would be even worse. We need government to increase the confidence in the market. We need a support when doing a transaction.
I agree with you Ernest, the markets can not just freeze as it would only hurt economy more. Governments around the world are taking the nescessary steps to bring confidence back to the people, not an easy thing to do thou