USD & JPY Recover

By Korman Tam
10/20/2008 2:30:00 PM
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The dollar and yen recovered from overnight losses against the majors, edging higher during the New York session. The greenback recovered from its lows against the euro at 1.3530 to climb higher to 1.3289 while bouncing back versus the sterling from 1.7516 toward the 1.71-figure. Meanwhile, the yen advanced sharply from 179.18 versus the pound to the 174-level and from 138.54 against the euro to the 135-handle. The major equity bourses were relatively stable, with both the Dow Jones and S&P 500 up by over 2% in afternoon trading and the Nasdaq higher by over 1%. Crude oil also crept, edging above $74 per barrel to $74.20.
Fed Chairman Bernanke testified before Congress earlier, warning that the economy will likely remain weak over the coming quarters and suggesting that it is currently in a serious slowdown. Bernanke said it would be appropriate for Congress to consider another economic stimulus package, adding that any fiscal package should be significant and also include improved access to credit. He said there were encouraging signs in the credit markets but added that it was too soon to assess. Further, Bernanke said that stabilization of the financial markets will not quickly eliminate the economic challenges. His somber assessment in the economy raises the scope for the FOMC to cut rates by at least 25-basis points at its two-day policy meeting next week.
US Treasury Secretary Paulson elaborated in greater detail the plan to inject capital into banks. He said the banks are expected to employ the new capital and to strengthen efforts to help homeowners avoid foreclosure. Paulson said financial institutions controlled by foreign entities would not be eligible for the program. Lastly, he stressed that the bank share purchase plan should be viewed as investments rather than expenditures and that he expects no taxpayer cost as a result.( More.. )
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