Archived IMT (2008.10.06)

Classic case of deleveraging and Forex unwinding of carry trades is underway as Asian markets tumble after Friday's capitulative following Wall St despite the passing of the TARP package by both Chambers of US Congress. USDJPY plummets 2.5% or 330 pips from Friday's close, sending other yen crosses into damage territory. Dollar also starting to lose ground vs CHF but remains firm against other high yielders. EURUSD drops 240 pips to 1.3600 (lowest since Sep 2007) now facing 1.3580 as next support, which is the high from January 2005. The week's Data Calendar will give way to FED SPEECHES, seen hinting at October rate cut. Fed Gov Evans and Dallas Fed's Fisher to speak on Monday, followed by Bernanke and Stern on Tuesday, and Plosser (Philly) on Wed, and Stern and Rosengren (Boston) on Thursday. Hawks such as Fisher and Stern will lighten their anti-inflation focus, and that should signal the much awaited rate cuts.