Flash Crash - the correction that wasn't. I'm running out of superlatives to describe Tuesday's sell off. It reminds me of May's stock market flash crash, it happened and we moved on. These markets have become so screwed up, how can you invest or trade when you would be hard pressed to find a trade that is non-correlated to the USD. Anyway back to the grind, the USD trimmed gains against the Euro as market players deciphered earlier comments by U.S. Treasury Secretary Timothy Geithner. The Wall Street Journal quoted Geithner as saying major currencies were roughly in alignment and that he would use a weekend meeting of G20 finance ministers to advance efforts to rebalance the world economy and move toward norms on currency policy. He divided currencies into three categories. The first, including China's yuan, were undervalued by any measure, while the second group were those of emerging economies with flexible exchange rates that intervene or impose taxes. The third comprised major currencies "which are roughly in alignment now", a comment the WSJ said suggested he saw no reason for the USD to fall further against the Euro and Yen. Personally, I think Geithner was talking up his book, the USD, ahead of the massive money printing the U.S. will embark on in November. He sure could not say that he believes in a strong USD policy. Later, the Euro moved higher after a gauge of regional manufacturing unexpectedly increased. Elsewhere, the GBP remained under pressure on concern the Bank of England will boost the economy by printing cash as Prime Minister David Cameron’s government reduces the deficit. Meanwhile, the USD approached a 15-year low against the Yen but did press its advantage as market players are wary that Japanese authorities could intervene to slow the Yen's rise again, after they did so on Sept. 15, selling Yen for the first time in more than six years. Also, Asian currencies were up on news that China’s economy grew 9.6% in the third quarter and inflation accelerated to the fastest pace in almost two years. In Canada, the CAD was up on China's news but later gave up those gains on news that Canada’s index of leading economic indicators unexpectedly fell in September, the first decline since April 2009, led by housing and manufacturing.
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