Intraday Thought – November 21, 2008

Thursday’s New York trade saw currency markets turning risk averse at the outset with the Japanese Yen standing out a clear winner as the latest numbers from the US underscored the weakness from both the supply and demand sides of the economy prompting early doubts over the equity market – US dollar inverse correlation. Note that the US continues to bleed jobs the latest claimant count figures showing another upside surprise following last week’s this time at 542,000 while the Philly Fed Index demonstrated just how bad the situation is for manufactories coming in -39.3 that with other regional indices suggests another sharp drop is in store for ISM Manufacturing. Also of note for the session was talk that congress was ready to pass legislation to help Detroit automakers though this turned out to be hot air with congress shelving any decision until next month contingent on the Big 3 coming up with a plan on how it plans to turn-around an ailing US auto industry. All in all we will continue to look for risk aversion plays going into the Asian open though again caution is advised for the Japanese open with additional liquidity possibly dampening price action given oversold intraday indicators and none too dramatic read at the close for the US indices.