Forex Investment and Currency Trading

• This will relieve the pressure on the US dollar and we are already seeing EUR swing up to 1.3670 (100pts higher).  JPY is also a much weaker as well. 
• FED to buy 3m CP to run through April 2009.
• This is major news…the FED has never supported any market through unsecured lendigng.  The FED is essentially taking on banks credit risk, acting as the intermediary, and hopefully opening up short term paper.
• Forwards may actually correct and trade back to normal levels if this is successful.

Fed considering new measures including unsecured lending, earnings season begins

• In what would be an extraordinary development for a Central Bank Fed officials are said to be considering making a foray into unsecured lending in order to forestall a further deterioration in money market liquidity. Should it do so it would be an attempt to counteract the ongoing shrinkage in the commercial paper market. Fed data showed that the U.S. commercial-paper market shrank a record $94.9 billion in the week ended Oct. 1 to $1.61 trillion, on top of a $61 billion fall in the previous week. Most of the recent shrinkage came in commercial paper issued by US and foreign financial companies. The unsecured commercial paper market for financial companies has shrunk to $683 billion from more than $835 billion in March this year.
• The Q3 earnings reporting season kicks off tomorrow with Alcoa being the first major firm to report. Excluding financials S&P 500 earnings are actually expected to be up 9.1% mostly due to gains by energy companies (+45%). Financials are expected to show a 63% earnings decline
  leading the overall change in S&P500 earnings to be down 5.6%.