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DENVER, CO, USA - GALACTIC DAILY FX UPDATE
SUMMARY
The dollar is lower against all major counterparts this morning, driven
largely by a steep slide against the yen. Greenspan calmed markets this
morning, by stating that the US is far from experiencing a credit crunch and
re-assuring markets that the economy is still quite strong. Though he did
admit that the outlook for 1999 had weakened immeasurably as a result of the
ongoing global crisis.
EUROPE
The German mark reached 20 month highs against the dollar in last nights
sell off. Bundesbank President Tietmeyer rejected calls for lower interest
rates by the German central bank, saying that European rates must converge
at the German level for the European Monetary Union. He further stated that
Germany and the US were in different situations and cautioned that Germany
should not necessarily follow the US model for setting interest rate levels.
British PM Blair spoke in Beijing on Wednesday, calling on Japan to take
urgent action to strengthen its financial system. Blair also made comments
suggesting that the G7 make a fresh commitment to strong international
growth and stability. Reading between the lines many analysts see a subtle
prompting for the Bank of England to ease rates as their policy body meets
Thursday. However, the inflation cautious Monetary Policy Committee is
likely to cut rates only a token amount, if at all.
ASIA
Dollar collapsed to eight month lows against the Japanese yen overnight,
amid rumors that the Bank of Japan would sell off US treasuries to boost
liquidity among their ailing banks. The US currency was not helped by talk
that US hedge funds were unloading massive dollar positions. Major
technical levels were crushed as the dollar fell over eight full yen before
hitting bottom. Pacific rim dependent currencies such as the Australian and
New Zealand dollars were driven higher in tandem with the yen's move.
NORTH AMERICA
Canadian dollar also benefited from the dumping of US dollars, gaining a
full three cents off of yesterday's close. Canada is heavily influenced by
the performance of its Pac-Rim trading partners and followed closely behind
movements in the yen and Australian dollar.
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