FX Overnight Briefing

Financial News - US & Far East

  • Good day in U.S.
  • Oil above USD 80
  • Northern Rock in trouble
  • Still waiting

Today's Main Events

  • EUR: CPI
  • USD: Retail sales
  • USD: Michigan consumerconfidence

American Timezone:

Good day in U.S.

U.S. stocks rallied after Countrywide Financial Corp. secured new credit lines and investors speculated that financing for businesses and takeovers is becoming more plentiful.

Countrywide, the largest U.S. mortgage company, rose the most in three weeks after analysts said it can pay its debts.

General Motors Corp. posted its steepest gain since May 2006 on prospects its workers will agree to cost cuts. McDonald's Corp. advanced to a record on plans to boost its dividend.

Shares of financial companies contributed the most to the rally, helped by a Federal Reserve report showing the decline in the commercial paper market slowed.

JPY fell

JPY had its biggest decline against USD and EUR in more than two weeks as expectations for higher interest rates in Japan declined and investors appetite for riskier assets climbed.

Further to depress the JPY was the unexpected resignation of Prime Minister Shinzo Abe Wednesday.

Oil above USD 80

Oil closed above USD 80 in New York for the first time after hurricane Humberto shut three refineries in Texas.

Far East Timezone:

Nikkei rose

Asian stocks rose on Friday boosted by financial shares after a Wall Street analyst said stocks of U.S. investment banks were undervalued, but caution ahead of U.S. retail sales data kept the dollar under pressure.

After setting a record high of USD 80.20 a barrel, U.S. crude took a bit of a breather, slipping 31 cents to USD 79.78 in early Asian trade.

Northern Rock in trouble

The Bank of England has agreed to give emergency financial support to the Northern Rock, one of the UK's largest mortgage lenders, the BBC has learned.

However this does not mean that the bank is in danger of going bust, Business Editor Robert Peston says.

There was no reason for people with Northern Rock savings accounts to panic, he added.

The bank has struggled to raise money to finance its lending ever since money markets seized up over the summer

Still waiting

The market is still waiting for FOMC next week to show the way for weaker USD. The risk is coming back into markets, but investors are keeping and eye on every story about new banks in trouble, that can destroy this new found positive attitude in the market.

Eur/Jpy traded above 160.00 for the first time in a month after the financial turmoil started and this could be signs of new found risk appetite from investors.

Jyske Markets - FX Research

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