Shadows of depression..

Plunge, Tumble, Dive, gloabal equities bloodbath, volatility spikes safe haven currencies soar.. Such are the terms that perfectly descibed market sentiments in past few days. US sovereign rating downgrade by S&P from AAA to AA+ on seemingly unsustainable debt level and poor economic outlook, combined with worsening debt woes in EUR region sent shivers in market. FOMC outlook yesterday provided brief relief to market but not because confidence in economy increased. FOMC painted a gloomy picture to economy, interest rates to continue remain low. So there's really no reason why stocks posted impressive gains after this, and the only reason I can think is that market is correcting an overreaction?
In anyway, here's how currencies fared:

	SGD	NZD	AUD	EUR	JPY	CHF	XAU	USOIL
8/10/11	1.21054	0.83527	1.03548	1.43538	77.029	0.72427	1754.1	81.35
8/9/11	1.20809	0.83657	1.03485	1.43731	76.945	0.72063	1740.1	81.83
8/8/11	1.22228	0.8204	1.0186	1.41753	77.739	0.7548	1719.1	80.7
8/5/11	1.2149	0.84385	1.04638	1.42809	78.419	0.76535	1660.1	87.03
8/4/11	1.22367	0.83593	1.0463	1.4089	78.875	0.76339	1646.2	86.35
8/3/11	1.20482	0.8632	1.07515	1.43208	77.04	0.77008	1661.4	91.9
8/2/11	1.20561	0.86615	1.07772	1.42004	77.103	0.76202	1660.8	93.24
8/1/11	1.20089	0.87615	1.09687	1.42488	77.199	0.7834	1619.3	95.03
7/29/11	1.20322	0.87885	1.09854	1.43712	76.886	0.787	1625.7	95.9
7/28/11	1.20144	0.87095	1.10006	1.43325	77.651	0.80109	1615.7	97.15

	SGD	NZD	AUD	EUR	JPY	CHF	XAU	USOIL
8/10/11	0.20%	-0.16%	0.06%	-0.13%	0.11%	0.51%	0.80%	-0.59%
8/9/11	-1.16%	1.97%	1.60%	1.40%	-1.02%	-4.53%	1.22%	1.40%
8/8/11	0.61%	-2.78%	-2.65%	-0.74%	-0.87%	-1.38%	3.56%	-7.27%
8/5/11	-0.72%	0.95%	0.01%	1.36%	-0.58%	0.26%	0.84%	0.79%
8/4/11	1.56%	-3.16%	-2.68%	-1.62%	2.38%	-0.87%	-0.91%	-6.04%
8/3/11	-0.07%	-0.34%	-0.24%	0.85%	-0.08%	1.06%	0.04%	-1.44%
8/2/11	0.39%	-1.14%	-1.75%	-0.34%	-0.12%	-2.73%	2.56%	-1.88%
8/1/11	-0.19%	-0.31%	-0.15%	-0.85%	0.41%	-0.46%	-0.40%	-0.91%
7/29/11	0.15%	0.91%	-0.14%	0.27%	-0.99%	-1.76%	0.62%	-1.29%

Immediate reaction after FOMC meeting:

	SGD	NZD	AUD	EUR	JPY	CHF	XAU	USOIL
Before	1.22232	0.80736	1.0008	1.42285	77.119	0.74959	1752.1	77.38
After	1.20809	0.83657	1.03485	1.43731	76.945	0.72063	1740.07	81.83
Change	-1.16%	3.62%	3.40%	1.02%	-0.23%	-3.86%	-0.69%	5.75%

It's risk-taking following the meeting. Committment to keep US rates especially low boosted high yielding ccy like NZD and AUD. But the rally in ccy is short-lived. Asian Trades opened higher in equities, but reaction on ccy was subdued, and more like rangebound, and most erasing gains made just before NY close previously. What signal does FOMC send to boost market really? Actually nothing. Hence, it's not very surprising why the rally is so short.

My interpretation to all these economic developments:
-USD to gradually lose its safe haven appeal. Low rates, high debt, poor jobs data. There's no benefit to US on a strong dollar. In fact the weaker the better so that it can stay competitive in international trade.
- Sell USD against ccy like SGD, NZD, AUD.. Past few days have been an overreaction. With the LT appreciation trend in SGD, this presents a good buying opportunity. NZD ad AUD interests to remain strong due to yield advantage. But fragile sentiment now cannot be ignored.
-CHF is a safe ccy indeed. But in ST the current CHF level looks dangerously high, and ready for a correction. Even if it's not there's intervention risks.  Monitor and buy CHF on dip again as pessimistic global outlook tends to have exaggerated reaction on this pair.