A Super Tuesday for the Dollar ?
Exactly a week ago, US authorities mounted extraordinary legal acrobatics in order to shore up confidence in the US and world financial system. Today's quadruple testimonies (9.30 am EST) have no choice but to aim at the same objective, especially with the dollar and US equities ominously plummeting less than 3 days after the biggest banking bailout in history.
Euro Retreat Seen Limited at $1.4680
EURUSD seen joining European and antipodean pairs in losing some of Mondays gains as the excessive moves in oil prices are expected to stabilize.
Euro losses are seen extending down to $1.4710 and $1.4680 before some stability is likely to ensue ahead of Wednesdays 4 am EST release of the September IFO survey. Although the Business Climate and Current Assessment indices are both expected to show the fourth consecutive monthly declines, we anticipate a surprise increase in September to result from positive responses on the basis of lower oil prices and a weaker euro. This was the reason to the unexpected rise in last weeks release of the ZEW survey and we expect it to do the trick for the September IFO. Since the IFO survey has acted as the most consistent trigger of major euro moves (upside and downside), we expect Wednesdays release to prop the euro back above the $1.4750s and onto $1.4865-70. But prior to this, were to see temporary lows near $1.4680s.
USDJPY Rally May Reach 107 yen
Cable Losses Could Reach $1.8450s
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Certainly the IFO will be more pressing in determining the shortterm flow in EUR than any implications on European banks from the crisis. There's plenty of talk of surging leverage by European banks tied to US banks, but it is things such as i) IFO and ii) Buffet's interest in Goldman that will shape the thngs to come. Regarding the FX Futures flows, it makes sense that euro longs saw a sharp spike last week considering the moves in the cash market.
CME volume have shown greater buying interest for EUR futures recently, therefore, is it better to take the Centre of E..'s reports lightly for the short term. http://blogs.wsj.com/economics/2008/09/22/european-banks-too-big-to-rescue/
Another topic:
Since Japan had a holiday yesterday, is it possible for the USD/JPY to slide early asian session as further liquidations happen? or will the eventual congress-fed deal keep negative equity markets' influence on USD/JPY light.