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Thursday, March 19, 2009

Market Summary 19 Maret 2009

U.S. dollar tumbled sharply after Fed surprised markets by escalating quantitative-easing program, signaling more
aggressive approach to keeping longer-term yields low, stabilizing credit
markets. EUR/USD reached 1.3499, highest level since Jan. 9, marking one of its
biggest intraday gains; in early NZ trade euro tapped 1.3533, and dollar fell
below 96 against yen for 1st time since Feb. 24.

Dollar selloff was triggered
after Fed said it would expand its purchases of mortgage-backed securities by
additional $750 billion plus spend as much as $300 billion to purchase U.S.
Treasurys; "the U.S. dollar took a significant hit right across the board,"
said Dustin Reid, director at RBS Greenwich Capital Markets; says mechanics of
Fed program increases money supply, erodes the value of the dollar; confidence
boost to markets also increasing risk-appetite, reducing safe-haven flows to

Late Wednesday, EUR/USD was 1.3480 vs 1.3009, last at 1.3522 in
Wellington. USD/JPY 96.21 vs 98.54, last 95.85; EUR/JPY 129.70 vs 128.17,
GBP/USD 1.4288 vs 1.4041, USD/CHF 1.1432 vs 1.1828. Stocks rose as Fed decision
boosted financial institution shares such as AIG, Bank of America; Citigroup
rose 23%, to triple value since early March low; BofA +22% to highest level
since January. Dow +1.2%, Nasdaq +2%. Treasurys surged on Fed move with 10-year
yield posting steepest one-day drop in more than 2 decades; bonds rallied
across board. "It takes your breath away," said Chris Ahrens, interest rate
strategist at UBS Securities LLC. 10-year yields fell 47.9 bps to 2.52%,
30-year fell 25 bps to 3.55%.

Nymex April crude down $1.02 at $48.14/bbl as
prices backed down from recent highs near $50 after data revealed U.S. crude
stockpiles at their fullest since 2007. Comex April gold fell $27.70 to
$889.10/oz, mostly on chart-based long liquidation after some of the recent
safe-haven demand waned. (SML)

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