IFX Market Report - 30 November 2009
Overall the market stayed in a strong risk-aversion mode in Friday morning trade, something that sent the majors pairs lower at a very strong pace. Shortly after the opening of the European session, the majors pairs managed to set a bottom and retrace a part of the selling seen earlier in the session. In order to achieve this, the major pairs were helped by the cash and equity markets, which bounced off important support levels.
The USD/JPY touched 14-years lows overnight after the Japanese Finance Minister threatened to intervene in the currency market. Ahead, the macroeconomic calendar is empty of any important news reports, something that might allow the market to absorb the latest fundamentals.
The Euro (EUR/USD 1.4920) had plunged approximately 180 pips by the beginning of the European session. However, the market managed to find a bottom near the 50-day moving average, and since then, the euro has developed a small uptrend. The last time that the market successfully broke below the 50-day moving average was in April 2009.
The Pound (GBP/USD 1.6410) tumbled as much as 230 pips in intra-day trade, but helped by the European open, the pair managed to retrace more than half of this downtrend. Right now, the pound is trading in the 1.6400 area, near the lowest value that the it has touched over the last three days of trading. In the same area, around 1.6400, the 100-day moving average can also be found.
The Aussie (Aud/Usd 0.9000) saw a very strong downtrend over the last two days of trading, reflecting the selling seen in the commodity market. During this sell-off, the aussie tested the 0.8950 area, which has been the main support area of the last two months of trading. A break beneath this price point will mark an important episode in the pair’s price action.
Sterling hit one-month lows against the dollar and euro on Friday on concerns about the potential damage to the fragile UK banking sector from Dubai's surprise delay on debt repayments. Major UK banks have made large investments in Dubai. Middle Eastern players have also been big buyers of sterling recently.
But the pound came off its lows as UK shares recovered, led by bank shares which were hammered the previous day. London's leading index FTSE was up 0.8 percent on the day after falling sharply earlier in the session. Trade was volatile in a holiday-thinned market. U.S. markets were on a shortened session after being closed the previous day for Thanksgiving Day holiday.
At 16.40pm EUR/USD was at 1.4966 with the euro being helped by stocks that are moving away from the lows at Wall Street. EUR/USD had risen more than a hundred pips during the American session. The pair jumped above 1.4930 to 1.4985 before retreating.
Today the Euro and Pound's recoveries from Friday's lows, which had extended during Asian session, are weakening on the back of negative opening on European stock markets.
EUR/USD recovery from Friday's low at 1.4828 has capped at 1.59085, and the Euro gave away about 50 pips on European opening, dropping to levels around 1.5020.
GBP/USD recovery from Friday's low at 1.6270, has capped at 1.6595 to dip on European opening to levels below 1.6550, to test session low at 1.6475, which, so far remains intact.
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