FOREX EXCHANGE

OCT 2008

The markets began the weeks trading with a glimmer of hope following the meeting of the group of seven finance ministers on the preceding weekend and rhetoric that the world will unite and do “whatever it takes” to restore confidence in credit markets. The big dollar received a boost on the Monday morning open in Asia and traded higher early in the week against the Yen reaching highs of 103.05 as equity markets rallied and confidence returned. The move proved to be short lived however as concern spilled from credit markets to the broader global economy with a worldwide recession seemingly a forgone conclusion.

As global equity markets continued to plummet a flight to safety saw the Yen strengthen as the week progressed moving to 99.25 against the U.S dollar, 133.50 Euro and 64.55 Aussie dollars. The Australian dollar, viewed as a barometer of global economic growth, rallied early in the week to a high of 0.7235 as hope emerged that the worst had passed. However commodity prices took a battering midweek with Oil reaching almost $70 a barrel and concerns that China may also slow as well hurting the Aussie dollar. The local unit returned to battler status once again trading below 65 cents before experiencing somewhat of a recovery late in the week to open around 69 cents against the Greenback and above 2.5 against the Pound Sterling today.

The Kiwi exchanged between 0.5890 and 0.6345 in trade against the Greenback last week, retesting downside support on a couple of occasions to finish the week back above 61 cents. With more interest rate cuts expected from the RBNZ this week and investors nervous about the global economy the NZD continues to struggle to hold on to any gains above 62 cents.