• Strong buying from near 88.00 sends USD/JPY higher
  • Latvian credit default swaps widen; Swedish banks hit due to heavy exposures, SEK falls
  • French PM Fillon: System cannot be stable without order among currencies
  • Algerian oil min: OPEC has no alternative to the dollar; dollar will eventually need to share space with euro, yuan
  • Berlusconi loses court battle over immunity
  • US sells $20 bln 10-year notes at 3.21% yield; strong 3:1 bid-to-cover
  • 10-year note closes at lowest yield since mid-May at 3.18%. What dollar crisis?
  • US consumer credit falls $12 bln in August; seventh monthly drop in succession
  • Anti-dumping investigation launched by US versus China regarding steel pipe; sure to heighten US/China trade tensions
  • Canada’s Flaherty: Always concerned by CAD volatility, USD weakness
  • S&P 500 edges up 0.3% after sluggish session
  • Gold closes at $1043 after touching $1048 intraday; oil weakens $1.25 to $69.60.

USD/JPY was a volatile ride during the US session, building on London’s gains after bouncing from the 88.01 level. A barrier at 88.00 was successfully defended and prices were chased higher on buying by the Saudi Arabian Monetary Authority (SAMA), traders report. A $2 bln buy order executed by a US bank helped carry the pair through offers in the 99.20/30 area during the US morning and on up to 89.40 where selling from Japanese exporters and from options players (presumably those who defended 88.00) capped the market. USD/JPY subsequently ground lower for much of the rest of the US session, falling to the 88.40s before stabilizing.

EUR/USD consolidated below 1.4700 during the US session, swinging largely in-line with share prices. Latvian concerns helped cap the topside for EUR/USD on fears that country’s banking woes could hit Scandinavian and European banks who have heavy exposure to the region.A sell order in EUR/GBP helped push EUR/USD briefly to 1.4650 but prices were buoyed by central bank reserve diversification on dips.

AUD/USD dipped as low as 0.8865 in New York trade, weighed down at various points by selling of the commodity currencies as oil fell more than $2 at one stage and gold dipped below $1040. Both commodities rebounded later in the day, helping AUD end just below 0.89.