Archived IMT (2008.11.09)

Forex rates gap higher in Asia's Monday morning session in favor of higher yielding currencies at expense of USD and JPY in line with Fridays 2.9% rally in S&P and Dow. But these significantly high FX prices are unlikely to hold due to 1) the fundamental reality of the 14-year high in US unemployment rate 2) S&Ps downgrade of GM to a deeper junk status at CCC+ on further deterioration in its cash balance and new layoffs announcement. Although USDJPY gapped from 98 to 99.30, I expect it to retreat towards 97.50s. Similarly for GBP, it is expected to extend declines from $1.5820 high to as low as $1.5660. Note that my $1.5650 target from Fridays post-jobs analysis was already hit. EURUSD seen retreating towards $1.2720, but EURGBP may regain 0.8155-60.