Coordinated Intervention Sends USD JPY Sharply Higher
After a break to nearly 76.00 on Thursday, the USD JPY rallied overnight after the Group of Seven nations agreed to take steps to curb the Japanese currency’s rapid rise. The wave of coordinated intervention by the global financial powerhouse also known as the G-7 is an attempt to stabilize the Yen and bring it back to more respectable levels following the post-earthquake rally.
Commodity-linked Currencies Fall Sharply Led by Australian Dollar
All of the commodity-linked currencies were down hard on Wednesday. The Australian Dollar was down the most because of its strong link to China. Downside momentum is building in this market which could trigger a test of the last main bottom at .8904. Ultimately, this market seems destined to test a major 50% price level at .8644.
Weak China Data, Reaction to Fed Move Driving Equities Sharply Lower
In what may be developing into a series of bad reports like the U.S., China reported more economic weakness overnight, triggering rallies in both the Dollar and the Japanese Yen. The moves into these so-called “safer currencies” suggests that investors are turning risk averse once again, leading to tremendous sell-offs in risky assets.
U.S. Stock Futures Point toward Sharply Higher Opening
U.S. equity markets are called sharply higher this morning following a strong surge to the upside, triggered by better-than-expected European industrial orders. All of this action reversed the huge sell-off from Thursday which was ignited by comments from Fed Chairman Bernanke, who described the economic outlook as “unusually uncertain”.
Treasury Bonds Rally Sharply Higher in Flight to Safety Rally
June Treasury Bonds closed sharply higher as equity markets collapsed and demand for safer assets increased. The rally early in the trading session sent yields plunging while triggering a breakout over the last main top at 121’05. T-Bonds began to break from the 121’14 high near the mid-session after triggering stops above the last main top at 121’05.
Political Uncertainty, Debt Concerns Send British Pound Down Sharply
The GBP USD plunged following reports that a poll indicated that the minority party may win the upcoming election. Such a move will mark the first time since 1974 that the minority party has gained such power. Investors feel that this drastic change will stall the country’s efforts to shore up the U.K.’s debt issues.
EUR USD Finishes Sharply Higher but Traders Remain Cautious
The EUR USD finished the day up sharply but backed off its high as traders took a cautious trading approach after several weeks of declines. Short-covering drove this market up on speculation that the European Union had reached a tentative agreement to provide loan guarantees to deficit-riddled Greece. Traders remain nervous about the outcome of the possible agreement.