Forex Blog by Greg Secker

After a frighteningly huge opening burst of positive movement The Dow Jones then spent the entire session meandering to a close that was down a paltry 76 points at 9,310 belying the 700 point range of the day. Today look for similar indecision but tempered by the news break at 1.30pm British Summer Time of the US Producer Price Index which could signal downward movement if negative to expectation. At home the FTSE unsurprisingly played a similar game, but rallied 130 points late in the day to finish 137 points up at 4,394. Today there is some low level news out at 9.30 am BST but given the potential emphasis for further alignment with DOW during the session, late downward movement could drag the day lower should the PPI figures be worse than expected. Gold is trading at $839.50 and Oil trading at $78.63 so that’s it for today  – good trading and I will speak with you tomorrow
 

Yesterday – notes Greg Secker – gave no respite from the recent volatility with the Dow Jones showing a partial reversal of the recent meltdown madness. U.S. stocks rallied strongly from the open, sending the index to its biggest ever daily point gain of 936 to close at 9,387 on the back of the government plan to buy stakes in banks and a Federal Reserve-led push to flood the global financial system with dollars. Today with further upward movement suggested as some faith returns amongst the bargain hunting bulls, watch for a break of the 9,600 level for decisive upward direction which, if sustained, will set up the backend of the week for a fall from potential negativity highlighted by the PPI, CPI and Housing Starts reports due out from Wednesday onwards, and which are unlikely to inspire a consolidation of confidence. This side of the Atlantic the FTSE closed up after another massive point movement of 324 at 4,256. With the worst of the shareholding panic seemingly over and with our own Consumer Price Index news out at 9.30 am British Summer Time, today look to early movement and then early adjustment around the 4,300 level to provide directional indication for the day, notwithstanding the usual Wall Street effect from 2.30 onward. Gold is currently trading at $835.00 and Oil at $81.84. Good trading and I will speak with you tomorrow.
 

Yesterday – notes Greg Secker – saw a coordinated interest rate cut by 7 of the worlds largest central banks. The world’s top central bankers stepped in to boost confidence with a coordinated 50 basis point interest rate cut…..which was met with some indifference as the US treasury secretary  warned some banks will still fail despite the $700bn (£406bn) rescue package to shore up the financial system. 

In an unprecedented co-ordinated move on Wednesday, rates were cut by the Bank of England the US Federal Reserve and the European Central Bank, with similar cuts from the central banks of Canada, Sweden and Switzerland. 

Although it did not cut its own rate – which is just 0.5% – the Bank of Japan expressed its “strong support” of the policy. In a separate move, China cut its own interest rate by just over quarter of a percent. 

While European and US markets initially reacted well to the news, they later lost ground as investors were unconvinced the rate cuts were enough to solve the financial crisis. 

In New York, the main Dow Jones stock index lost ground for its sixth consecutive session, ending 2% down after a day of 400 point swings.  It opened the day with early selling pressure, but bounced sharply off 9,200 before rallying to 9,600. The Dow then repeated its drop back to 9,200, rallied back to 9,600 before closing the day just above 9,200 with a loss of 189 points. As usual, the Dow should continue to be considered highly bearish, despite any intermediate rallies that may occur. 

 

The FTSE also had a day of swings some as large as 300 points as news of Alastair Darlings Rescue Package and the coordinated interest rate cut hit the market. It closed the day down 238 points at 4366. 

 

The DOW Futures are being called up 84 and the FTSE daily future is being called up 75 points. Crude Oil is trading at 87 dollars a barrel and Gold is trading at 894 dollars a troy ounce. 

 

Well what another bumper day we had on the markets yesterday!  I think it was fair to say that after Mondays trading sessions we expected a fair amount of carnage in the market.  And that’s exactly what we got! 

So yesterdays market movements continued to be driven by panic and fear. Assessing the damage, we can see that not surprisingly equities continued to plummet through all time zones. 

The FTSE had a strange day initially performing a dead cat bounce before news that major UK banks were in talks with the Government to secure a lending package sent the markets once again tumbling.  The FTSE closed down 80 points and 4605.  The biggest losers were HBOS and RBS who slipped 42 & 39 % respectively despite the ban on short selling! 

The primary risk asset for most US investors is the benchmark Dow Jones Industrial Average which tumbled over 508 points to close below 9500 for the first time in many years where it closed on its lows at 9447. 

Today should be another an interesting day. Whilst there are no major planned economic announcements today we already have details that Chancellor Alistair Darling has announced details of a 50bn pound rescue package for the UK banking system.  The initiative is aimed at stabilising the financial system by giving banks who usually rely on world money markets greater access to cash. 

Naturally people will be interested to see what effect Ben Bernanke’s comments last night will have had.  Whether we will see a panic cutting of rates remains to be seen. 

The DOW Futures are being called down -180 and the FTSE daily future is being called down 49 points. Crude Oil is trading at 88.68 dollars a barrel and Gold is trading at 886 dollars a troy ounce.