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US Dollar sold off on Lehman Brothers news

Europe bought the dollar back while heavy losses on the stock market kept liquidity low and risk aversion extremely high. US data was weak but overlooked as bigger events took precedence. Looking Ahead, FOMC Interest Rate Announcement with markets expecting a possible cut in rates to 1.75% from 2.00% and US CPI for August expected at -0.1%

The Euro traded in an extremely volatile fashion, gaining to highs in the Asian session before been sold off quite heavily in illiquid conditions falling over 400 pips. Q2 Labor Costs fell to 2.7% from 3.3%. Overall the EUR/USD traded with a low of 1.4085 and a high of 1.4482 before closing the day at 1.4260 in the New York session. Looking ahead, Eurozone August CPI is expected down -0.2%. Also released September ZEW Economic Sentiment expected at -53 from -55.5.

The Sterling also traded in an extremely volatile fashion breaking above 1.80 early Asia before falling heavily on GBY/JPY sales. GBY/JPY fell over 600 pips from Friday nights close. Overall the GDP/USD traded with a low of 1.7766 and a high of 1.8130 before closing the day at 1.8000 in the New York session. August CPI is expected to rise 0.5%. August Retail Price Index expected to gain 0.4%

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