Uncertainty over the health of US financial institutions and concerns that the rally since March may have risen too far, too fast boosts the US dollar.

  • To name a few, Wells Fargo, Bank of America, American Express and Citigroup all declined leading the Dow Jones Industrial Average lower.
  • The fear over bank losses and concern over more losses overshadowed manufacturing and housing data that topped economist estimates.  According to the Institute of Supply Management, manufacturing expanded in August for the first time in 19 months and the National Association of Realtors said contracts to buy pending homes increased more than forecast in July.
  • The VIX, a benchmark index for US stock options, which measures the cost of using options as insurance against declines in the S&P 500, increased 12% and closed at 29.15, the highest level since July 9th.
  • The Japanese yen traded near a seven-week high against the euro prompted by a sell-off in stocks which renewed demand for the relative safety of the yen.  The currency was already close to its strongest level versus the dollar in more than a month after Asian shares slumped.
  • The Australian dollar climbed from near a one-week low against the US dollar after a government report showed economic growth unexpectedly increased by 0.6% in the second quarter.

Currency to watch out for: AUDUSD & EURUSD

  • The AUDUSD pivot point is at 0.8340 with a preference to enter into short positions below 0.8340
  • The EURUSD pivot point is at 1.4275 with a preference to enter into short positions at 1.4265

Today's calendar and market movers:

  • US ADP Non-Farm Employment Change expected to rise to -250,000 from -371,000
  • US Factory Orders month on month expected to rise to 2.3%
  • US Crude Oil Inventories expected to drop to -0.8 million from 0.2 million barrels
  • US FOMC Meeting Minutes

Stocks:

  • Wall Street falls 2%, closing negative for a third straight day on Tuesday, due to concerns over the US banking sector and financial institutions.  This marks the three major indexes worst percentage loss since August 17th.
  • As of 06:05 GMT the Nikkei is trading at -2.55% and the Hang Seng at -1.58%