Daily Market Update 20/03/2008

New York Session
Published: March 20, 2008 5:53 PM

The USD continued to recover as commodity markets posted further sharp declines, with the CRB Index of 19 commodities posting its largest weekly loss since 1956. Gold fell another $34 to $910/oz and oil lost a little over $1 to close around $101.40/bbl after testing under $100 in early NY trading. In Forex markets, EUR/USD declined sharply in European trading, plunging from 1.5600 to around 1.5450 and spent most of NY testing the lows toward 1.5400. USD/JPY, however, came under selling pressure as the JPY-crosses (e.g. EUR/JPY, AUD/JPY) were hit hard again as speculative funds exited long-standing positions as commodities crumbled. USD/JPY fell from about 99.50 in early NY trading to a low around 98.50 before rebounding back toward 99.50 as US stock market gains accelerated in the afternoon. US stocks posted a 2+% gain on the day, led by financial stocks as fears over the credit crunch began to subside in the face of positive earnings reports and ongoing Fed liquidity measures.

US data released today did little to alter the picture of a slowing US economy. Weekly first-time jobless claims rose from 356K to 378K and continuing claims also posted another increase, rising from 2833K to 2865K, providing further evidence of a softening jobs market. The March Philadelphia Fed Index of manufacturing in the region posted a better than expected improvement to -17.4 from the prior -24.0 and expected -19.0, but Feb. Leading Indicators fell in line with expectations, declining 0.3% MoM.