Currencies

Equity markets closed higher at the end of what has been one of their best weeks ever. The same cannot be said for metals.

The US third quarter GDP was not as bad as expected allowing the Dow to gain 190 points.

When the Dow rallied 936 points in October 13 it fell 76 points on October 14. After an 889 point rally on Tuesday the Dow fell 74 points last night. The Fed delivered a 50 point cut as expected.

For the second time this month Wall Street has provided a spectacular rally, with the Dow rising almost 900 points in the session.

The Reserve Bank of Australia has been a rumoured buyer of Aussie dollars this week and the Japanese are also expected to intervene.

Given the state of European bank balance sheets and the poor technical picture, CIBC World Markets expects the euro to fall further.

The Dow fell 200 points – all in the last ten minutes – as buyers remained tentative. Base metals, however, put in some extraordinary reversals.

De-leveraging and lower oil prices should be good for the USD and in the shorter-term the yen, but not the Aussie, says Danske.

The Dow closed down 300 points on Friday, once again rallying 200 points from its lows. Wall Street has nevertheless been left wondering what might have been.

While much of the recent US dollar buying has been related to investors chasing safe havens other factors may see the run continue.