Tight Ranges In The Overnight Session

Overall, the currency market has been quiet overnight as most pairs have traded in tight ranges. Since the U.S. session is free of any scheduled top-tier economic releases, the currency market may continue the trend throughout the day.

The Euro (Eur/Usd) moved side-ways during the overnight session, moving close to the neutral pivot point. During the European session, the pair advanced a small number of pips. In the past few days, the euro has traded in wide ranges. The support area is at the 1.4050 area, while resistance will be found at the 1.4200 area.

The Pound (Gbp/Usd) gained 60 pips since the new trading day started, as the pair continues to be very volatile. The cable is now heading toward TheLFB R1 and at the same time, the high of the previous session. During the Asian session, the NIESR GDP estimate was released, showing the economy had contracted in the period between June to August.

The Aussie (Aud/Usd) gained 50 pips during the overnight sessions, the first time it has posted positive numbers in ten days. During the Asian session, the pair also broke above a trend-line that had held the pair for two days. The move is unusual, since gold, the commodity that backs the pair has had a big sell-off, reaching a 10-month low earlier.

The Cad (Usd/Cad) has lost 40 pips during the overnight sessions and is now trading just under the neutral pivot point. During the last few days, the cad has been trading in a range, unable to break decisively. However, if the oil market finds a direction, the cad may follow.

The Swissy (Usd/Chf) moved sideways during the Asian and early European trading hours, but as the European session progressed, the pair looked like breaking lower. If the swissy manages to close lower today, it would be the first time in the last two months that the Swiss Franc would have managed to strengthen against the dollar for two consecutive days.

The Yen (Usd/Yen) traded relatively flat during the Asian trading session, but during the European session, the pair has seen a surge in volume. The yen tried to break higher, but hit an area mined with orders, and this created a lot of volatility over a short period. During the Asian session, an economic release pointed out that the Japanese current account surplus widened in the past month, while the leading index had advanced from last month.

Bad news hit the Asian and European shares

Current Futures: Dow +92.00, S&P +12.10, Nasdaq +21.00

European Trade: European and Asian shares are down for a second day, after bad news hit investors. Lehman Brothers fell 44.95% yesterday to $7.79 (in February 2008 it was trading at $80) after a newspaper reported talks between Korea Development Bank and Lehman had ended. This had raised speculation that another round of losses will hit the bank's balance sheet, adding to the $500 billion already lost in write-downs.

At the same time, oil made a new multi-month low, sending commodity stocks lower. Energy shares on the U.S. market fell the most in the six years. Furthermore, a report showed yesterday the housing market still cannot find a bottom, while wholesales inventories rose much more than expected. All this bad news has lead to the major indexes moving lower.

As expected, the biggest declines were seen in the financial sector and in energy stocks in both Asia and Europe. The Nikkei declined 54.02 points (0.44%) to 12,346.63. The Australian S&P/Asx slipped 74.60 points (1.50%) to 4,905.50. In Europe, the major stock market indexes are losing ground. The German Dax declined 22.38 points (0.36%) to 6,211.03. The U.K. FTSE declined 29.00 points (0.54%) to 5,386.60.

Crude oil advanced after the OPEC President called for an end to overproduction. Crude oil for October delivery rose $1.41 (1.37%) to $104.67

Gold is recovering some of the lost ground, after the precious metal earlier dropped to the lowest point in more than 10 months. Bullion for immediate delivery fell $10.10 (1.28%) to $781.90.

Previous Asian trade: The past few trading days in the global equity markets can only be described as a road from euphoria to agony. On Monday, the global market had the biggest surged in months because of the Freddie and Fannie bailout. However, on Tuesday, stocks tumbled, practically erasing every gained made earlier. The S&P 500 fell yesterday 3.4%, its biggest drop since February 2007, only one day earlier the index had the strongest rally in the last month. The same thing happened in the Asian shares too. On Monday, the Nikkei had the strongest rally from the last few months, then on Tuesday every gain made earlier was reversed.

Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com

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