The lack of any pertinent economic data put the US stock market in the driver’s seat as the greenback was sold in the NY session here on July 9th 2008. Stocks plunged with the S&P 500 down -2.3% as financials stocks took it on the chin on heightened credit market worries. The dip occured even with a near -$2 decline in oil prices, which came despite a worse than expected inventory drawdown that was about 3x worse than what the market expected.

EUR/USD was bid modestly, rising to a close near 1.5745 after opening the session near the 1.5710 mark. The pair failed to cross above the 1.5750 area, which has been very strong resistance all week and is also right around the 200 hour moving average. A break above that level sees a try for 1.5800 next. To the downside below 1.5670 sees a try for weekly lows near 1.5610 initially.

USD/JPY sold off as US yields took a beating on the poor stock market performance. US 2-year yields fell -13 bps to 2.39% while the 10-year lost -9 bps to 3.81% in the span. USD/JPY fell from an open near 107.40 to close near the 106.70 area. We would expect further selling of the yen crosses if the US stock market rout spills over to the Asia and European marts overnight.

The upcoming Asia session should see some price action down under as we get the New Zealand business PMI for June and the Australia employment report for June. Aussie (AUD/USD) should retest the nearby high near 0.9590 on a positive report while Kiwi (NZD/USD) could try back up near 0.7620 on positive news.