Busy end of week for currency traders. The Bank of Japan’s surprise interest rate cut on Wednesday had a strong impact on the Yen, particularly after the European opening bell, which would eventually see UDSJPY finish the day trading under 150 Yen - a drop of 1.8%. On Thursday, the Bank of England narrowly elected to enact its first rate cut in four years, down to 5% from 5.25%. It was a volatile day but predictably Cable lost heavily against the majors, falling 0.9% to close the session at 1.274 Dollars to the Pound. The Australian Dollar continued its decline against the Dollar, losing another 0.7% yesterday.
The Federal Reserve opted to keep its own rate unchanged on Wednesday, although there are growing voices of dissent accusing the Fed of dragging their feet on the first rate cut. Some worrying signs emerged in the economic data releases this week, initial jobless claims coming in higher than expected and notably the ISM manufacturing PMI coming in at 46.8, much lower than estimates of 48.8 and placing it firmly in contraction. The data points are beginning to stoke recessionary fears in the US economy, fears that weighed heavily on indices yesterday. The Nasdaq Composite was hit the hardest, closing the session 2.3% lower; the S&P 500 and Dow Jones fell 1.4% and 1.2% respectively.
Amidst all the commotion, traders may have missed a significant move from gold on Wednesday, which climbed 1.6% to $2,447 an ounce, placing it very close to its record high from two weeks ago. There is still one chapter before the book can be closed on this week, and that is of course the Non-Farm Payrolls figures set to be published mere hours from now.
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