Looks like rate cuts instead of rate rises And 150 Bln euro pumped into the system just in 2 days. I think it might be at least 10-20% correction
The financial dimension of the mortgage crisis has just started to unfold on thrusday. It happened that it started in Europe, and we therefore saw the Euro plunging against the Yen. That being said, I very much doubt european banks are the only ones to have funds with interests in US mortgage securities, japanese banks are certainly as much in trouble if not more, we may just don't know yet. Besides, on Friday, the Euro met with buyers around 161/160, and in my intraday trading, I actually made money in buying Euro more than in selling it. As for who were the buyers, well, it seems japanese investors were among them, so despite serious rumors that other european banks may be impacted by the US meltdown (some german banks), the Euro still gained against the Yen overall. I don't mean that the Euro will climb its way up to the level it was before the crisis, simply that definitely shorting now is a bit of a risk. Personally, I will simply observe the market for the next few days, weeks, and maybe even months, it will remain volatile for quite a while, and there will be money to be made on the EUR/JPY pair in both shorts and longs. Some people seem to believe that EUR is still not such a bad deal, and they are the buyers of last friday. US real estate meltdown has not reached the bottom yet, and the Feds should indeed cut rates. US economy may well know a recession in the next months, and Europe still is a refuge investment for many, the Yen has profited from the early panic, I am not sure it will continue to do so against the Euro, which still has a growing domestic market to support it.
Maybe this little piece of information will help you : http://www.bloomberg.com/apps/news?pid=20601087&sid=a0yo.gXPnSS8&refer=home
hmmm ... you almost had that 10 % correction but seems like when europe opened friday around 3 am est the was a flight back into the carry trade and after the FED announcement some more volatility