In quite a reversal from what we saw in the markets yesterday, today we saw the Yen and the Dollar strengthen as caution drove buyers to the safe haven currencies amid fears that banks were still quite unstable. With newspaper reports stating that the IMF calculates almost trillion dollars in toxic assets still out there, investors bought the US Dollar and sold the Euro as evident by the 1.3426 high early in Asia eroding to a 1.3322 low as the day progressed. The pair leveled out close to 1.3360 as London came online. Against the Yen, the Euro fared the same, opening at a high near 135.56 that dissolved to 133.59 by midday, and climbed back to the 134.50 level by the days end. GBP/USD gave way as well, falling from 1.4774 to 1.4642ish levels as investors bought dollars. The Aussie Dollar fell as well against the Greenback ahead of the RBA rate decision in which many were up in the air as to what the RBA would do although a cut along the lines of 0.25% seemed to be the safe bet. That safe bet came through as the RBA cut 0.25% to bring the Australian rate to 3.00%, pushing the AUD/USD about 30 pips lower initially, but then catapulting it higher to just under 0.7140 as the RBA stated that Australia was in a lot better shape than most of its trading neighbors. Full text »
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