Currency Pair Overview: Risk Aversion Continues, Yen Intervention

Currency Pair Overview: Risk Aversion Continues, Yen Intervention
11/27/09 08:26 am (EST)

Currency Pair Overview: Risk Aversion Continues, Yen Intervention - Nov 27 09 8:26 EST

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Currency Pair Overview:

Risk Aversion Continues, Yen Intervention

Overall, the market stayed in a strong risk-aversion mode in Friday morning trade, something that sent the majors pairs lower at a very strong pace. Shortly after the opening of the European session, the majors pairs managed to set a bottom and retrace a part of the selling seen earlier in the session. In order to achieve this, the major pairs were helped by the cash and equity markets, which bounced off important support levels.

The USD/JPY touched 14-years lows overnight after the Japanese Finance Minister threatened to intervene in the currency market. Ahead, the macroeconomic calendar is empty of any important news reports, something that might allow the market to absorb the latest fundamentals.

The euro (Eur/Usd 1.4920) had plunged approximately 180 pips by the beginning of the European session. However, the market managed to find a bottom near the 50-day moving average, and since then, the euro has developed a small uptrend. The last time that the market successfully broke below the 50-day moving average was in April 2009.

The pound (Gbp/Usd 1.6410) tumbled as much as 230 pips in intra-day trade, but helped by the European open, the pair managed to retrace more than half of this downtrend. Right now, the pound is trading in the 1.6400 area, near the lowest value that the it has touched over the last three days of trading. In the same area, around 1.6400, the 100-day moving average can also be found.

The aussie (Aud/Usd 0.9000) saw a very strong downtrend over the last two days of trading, reflecting the selling seen in the commodity market. During this sell-off, the aussie tested the 0.8950 area, which has been the main support area of the last two months of trading. A break beneath this price point will mark an important episode in the pair’s price action.

TheLFB Trade Plan of the Day is one of the six that are available to members on the major pairs each day, plus four Jpy based cross pairs, as well as S&P futures, oil, gold, and the dollar index.

The cad (Usd/Cad 1.0705) surged 150 pips since the day started, but unlike the other major pairs, the cad retraced back only a small portion of the uptrend seen earlier in the session. The cad’s resilience to follow the market might be caused by the pair’s strong exposure to the commodity market, which was hit very hard by the news that Dubai World is seeking to delay its debt payment.

The swissy (Usd/Chf 1.0100) followed the euro throughout the overnight session, without having any clear attempts to break this inverse correlation. Most of the time, the two pairs move hand in hand.

The yen (Usd/Jpy 86.35) had a very active overnight session, especially after the Japanese Finance Minister, Hirohisa Fujii, said that he would contact U.S. and European officials about exchange rates if needed. The yen plunged to a fresh 14-year low in Asian trade, in the 84.60 area, but soon after the entire downtrend was retraced. This all happened in a 2-hour period, and since then the pair had been moving in a wide side-ways channel.

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Currency Pair Overview: Risk Aversion Continues, Yen Intervention - Nov 27 09 8:26 EST

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