Strategy Signal Forex Trading

Dollar and Yen Firm on Risk Aversion Despite Speculations of Intervention

Dollar and yen remains firm into European session as global stock markets tumble following US Treasury Paulson's reversal on TARP. In short, Paulson abandoned the original plan to buy troubled assets and instead plans to use the remainder of the $700b funding to ease pressure on consumer credit markets. DOW dropped over 400 pts following Paulson's speech and the weakness in stocks carried on in Asia with Nikkei down over 5%. Crude oil dives further to below $55 before recovering mildly while gold reaches as low as 708.4. Dollar index climbs to as high as 87.62 and is set to test recent high of 87.87 as expected. Yen crosses also surge across the board. Nevertheless, note that the rally in yen somewhat slows in Asian session today on speculations of central bank interventions. Source in RBA confirmed the that bank has intervened by buying Aussie overnight. There are speculations that BoJ will follow in case of another sharp and strong rise in yen.