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Forex News and Rumors for October 7th, 2008 – Afternoon Update

Fed to start buying commercial paper

Ben Bernanke on Tuesday opened the door to further US interest rate cuts on a day that saw the Federal Reserve moving to bypass banks and lend directly to American companies in an unprecedented attempt to unfreeze the money markets.

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Bernanke Signals Fed May Cut Rates

Federal Reserve Chairman Ben S. Bernanke signaled policy makers are ready to lower interest rates as the credit freeze worsens the outlook for U.S. economic growth and as inflation concerns wane.

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Morgan Stanley Says Mitsubishi UFJ Agreement Remains ‘On Track’

Morgan Stanley said its agreement to raise $9 billion from Japan’s Mitsubishi UFJ Financial Group Inc. is ‘on track’ after speculation the deal may fall through caused the company’s stock to fall as much as 40

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Middle East stock markets plunge

Egypt’s main index dropped by more than 16%, Saudi Arabia’s by about 8%, amid concerns the financial crisis is spreading to the Middle East.

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Yen Falls From Near 3-Year High as Fed to Buy Commercial Paper

The yen dropped from near a three- year high against the euro as the Federal Reserve’s announcement that it will buy commercial paper encouraged investors to resume buying higher-yielding assets funded in Japan.

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Bernanke, Paulson, Trichet May Act to Unblock Lending

Ben S. Bernanke and his fellow global policy makers may move to unblock markets for loans between banks and commercial paper as their next steps to combat the 14- month credit crisis.

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Iceland’s Krona Pegged; Government Takes Over Lender Landsbanki
Iceland pegged the krona to the euro at a rate 24 percent stronger than yesterday’s close in an effort to stabilize the currency and forestall possible bank defaults.

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Fed Announces Plan to Buy Short-Term Debt

The Fed said in a statement that it would begin to buy large amounts of short-term debt in an effort to stimulate the credit markets, which have all but dried up.

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Russia lends banks $37bn to stem crisis

Russia said on Tuesday it would pump $37bn in long-term subordinated loans into state-controlled banks in a new measure to fight off a deepening financial crisis that has seen the steepest losses ever on the Russian stock exchange.

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This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza [14]

Senior Currency Analyst at Market Pulse [15]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza