Co-ordinated 50 bp rate cuts from the Fed, ECB, BoE and others at 1100GMT
provided a welcome boost to carry trades after another turbulent
morning in fx.
Fed lowered its main rate 50 bp to 1.5%. BOC, SNB, RIKSBANK also cut
rates. BOE cuts by 50 bp In First Coordinated Move Since Nov 2001. BOC
cuts overnight rate 50bp as part of coordinated global central bank
effort. Overnight rate now stands at 2.50%
Aggressive sales of Aussie-yen and kiwi-yen in
particular had knocked all of the yen pairs lower, dollar-yen dipping
to a Y98 handle, while euro-yen slumped to Y134.20. Aussie hit lows at
$0.6459, some 700-points away from the Asian highs, with kiwi tumbling
to $0.5791 in dire liquidity. A slight recovery by the end of the
morning was then boosted on the rate cut news as stocks rallied.
Dollar-yen moved from Y99.40 to a Y101 handle, with euro-yen rallying
from Y135.40 to Y138.35 in volatile trade. Dollar-yen trades around
Y100.80 at time of writing, with the cross at Y138.10, while
euro-dollar has given back a portion of the late morning gains to trade
around $1.3680.