Published: August 29, 2008 2:47 AM
With the better than expected jump in the US GDP from 1.9% to a respectable 3.3%, the US dollar acted accordingly to the favorable news by pushing EUR/USD from levels near 1.4810 to a low of 1.46771 in NY trading. As Asia's trade day progressed, so did the reversal in Euro, as crude oil inched back from NY losses on continued fears that Gustav has the oil rig rich Gulf of Mexico in its crosshairs. As well, oil looks to continue higher once traders digest a story out of the UK that the Russian Government has contacted some of its state run oil companies about the possibility of turning down the oil spigot to Europe if tensions ever escalate. In Asia the EUR/USD hovered around the 1.4700 level for a good portion of the Asian morning, but then moved higher to just over 1.4750 as the lunch break ended.
USD/JPY made some moves as a good deal of the Japanese data releases this session were favorable. With industrial production, jobless rate and household spending all beating forecasts, it's safe to assume that the Japanese economy may not be in as dire straits as once thought. USD/JPY went from 109.55 early on to a low of 108.95 later in the session; EUR/JPY was victim of uninspired trading as it made its moves early and stuck itself in a 30 pip range for the past four hours. 160.80 was a level as of this writing. In Japan there is also talk that the 10 trillion Yen economic package is close to being unveiled to help grease the wheels in domestic bank lending.
Across the pond in the UK things are a little bleak, as UK housing prices hit their worst level in 17 years and retail sales had a drop not seen in 25 years. After hitting a 2 year low in NY of 1.8238, the pound rebounded to 1.8340 in Asia only to be beaten down from that level to near 1.8280 as breakfast was being served in London. This pair has made some wicked moves as of late, and don't expect that to change any time soon.
Keep in mind that this weekend represents the Labor Day holiday in the US and on Monday equity markets will be closed, however the FX market is business as usual on Monday in Asia. Have a good weekend.
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