Well maybe Bush wasn’t as good as the market expected….
Did his help lack substance? Was it enough? I don’t know. GBPJPY goes above and below 233.18 level ….. It seems to continue to drive the USDJPY and GBPJPY direction.
The markets will be losing liquidity as we head into the holiday weekend. This can exagerate the moves going forward (that is hard to believe, I know). UsdJPY test 115.70 resistance. GBPUSD has the usual support at 2.0150
I have to give Bernanke credit….
He is about the economy stupid and in particular employment as that drives spending, and housing. It is too soon for him to do anything and he is not, I repeat, not panicing. If he eases it will because of the economy.
On the otherhand, the government is helping housing. They are giving the low income sub prime people a break (or this is speculated that is what will happen) and let them refinance their mortages. In effect, they are saying, “the lenders took you down a slippery road that bordered on fraud and misleading practices. So get in a normal loan, make your payments, and don’t do it again”
It does not get us out of the mess. Housing still will have some problems (read 9.5 month of supply of houses on the market) and credit markets have to go through adjustments building normal risk curve for risk. All should make rates for housing still probably higher than in the past, and stop the free money borrowing for everyone from corporates to consumers. That takes money from all away and should hurt some businesses who in the past got cheap money through the Commercial paper market, debt market borrowing, etc. If you have cash, you are ok because cash is king. It will stop the leverage buying that made millionaires and could lead to bankruptcies. Finally, it should make for a slower consumer spending by those who may have to worry about job security, AND making the payment on the boat and trailer purchase on the home equity line of credit. Slower spending leads to slower growth in employment. Oh, and it should be good for inflation.
Chicago PMI better but Employment weaker
Employment will be key for the Fed. The government is helping the low income subprime housing market. Bernanke does not take questions after his prepared speech. I think the market is expecting too much of the speech buti t should provide for some excitement nevertheless….
EURUSD Testing the support at 1.3683 as stocks open higher…
The stock market opened higher as expected and will now be waiting on Bernanke. The EURUSD squeezed higher earlier up to a high of 1.3720 but thought better of getting too far away prior to the activity this morning. Before Bernanke will come the Chicago PMI. Expectations are 53 versus 53.4 previous.
The market is expecting good news today from Bernanke and Bush
With the stock market up in overnight trading (117 points at the moment), the market is expecting good news from the Fed. I don’t think that he will signal any specific change, but he should acknowledge the risks to the economy. Bernanke is calculated and patient. However, he has to react to economic weakness.
He appeased some problems by adding enough liquidity and not panicing. The Discount Rate reduction to me was just psychological in my opinion. Lets face it, if banks have enough reserves in the system to borrow amongst banks, the only purpose for the Discount window is for banks who are in trouble to borrow – i.e., those banks who other banks feel will close down overnight and therefore have limited lending to…
We have begun to see Initial Claims tick up. Unemployment is next Friday. Indications are that number will start to show employment problems. If/when it does, it will be enough for Bernanke to bail out a weakening economy, not the banks and financial markets who leveraged themselves through the roof.
The Currency markets will initially trade with the stock market. However, the stock market may be premature if it rallies too strongly. It still is too early to predict what the economic fallout may be with a weakening employment situation on top of a housing market and credit market not doing well.
Of course, all depends on the employment situation. This will be THE key.
Bush speaks today and it is expected that he announces some measures to help the low income people with sub primes to refinance through government agencies. Clearly, it does not do a weak housing market any good, to have foreclosed housing on the market and banks don’t really want to deal with it either. The best solution is for the Government to bail them out. It takes some pressure off the Fed as well.
NY opens and takes EURUSD through Resistance
NY opened up and took the EURUSD through resistance at the 1.3683. It propeled the EURUSD to the next level 1.3708.
Today there is data and Bernanke. Personal Consumption and Income, Chicago Purchasing Managers survey, Univ of Michigan Consumer Sentiment (final for Aug) and Factory Orders. At 10:00 is Bernanke’s speech on the economy and housing.
True to the prediction this morning at 9:54…
No rhyme or reason to the movements with levels being exagerrated on the up and down side. I guess when you have the market trending one way one day, the other way the next, and get to the third day, the movements become choppy.
In the latest, the market moved on reports of nerve gas at the UN. When in doubt, buy crosses I guess. USDJPY went up, GBPUSD went up, EURUSD went up and USDCHF went down….So GBPJPY went from a low at 232.46 low to 233.86. hmmmmm
GBPJPY testing support at 233.20
Support being tested at 233.20 in GBPJPY. EURUSD support at 1.3640. GBPUSD at 2.0150. USDJPY at 115.70, All being tested…..
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