- Asian markets fell across the board despite a very positive lead-in from Wall Street
- The USD rebounded modestly, making gains against all the majors except for the JPY
- Australian government and opposition are struggling to reach a compromise on an Emissions Trading Scheme (ETS) and a failure to agree could potentially lead to a general election
- Japanese government again stresses the importance of monetary policy in fighting deflation
- Chinese think-tank calls for stricter capital controls
- Gold has been steady despite the modest recovery in the USD, flat on the session at $1164.50/oz
USD/JPY is tied in between buy orders from semi-official names at 88.60 and corporate selling interest at 89.20/30. Trailing stops are seen either side of this range. USD/JPY opened at 89.05 but has drifted lower amid some signicant selling in the JPY crosses around the time of the Tokyo fix. Range: 88.82/89.06
AUD/USD opened close to its session highs at .9250 but the weak open on the Nikkei and some decent-sized selling interest in AUD/JPY at the Tokyo fix drove the pair lower, triggering trailing stops below .9210. The prospect of an early general election being called due to failure to reach agreement on an ETS has also encouraged some long positions to book profits. Range: .9196/.9255.
EUR/USD followed a similar trend to the AUD, falling as EUR/JPY selling at the fix dominated proceedings. Solid bids just below 1.4940 from two US banks have stalled the drop but stops are now noted below 25/30. Range: 1.4939/71.
Sterling has been relatively quiet also but has once again fallen faster than the EUR with EUR/GBP gaining about 20 pips during the session. There were no major GBP-related announcements. Cable range; 1.6562/1.6618.
Markets: Nikkei -0.8%, HK -0.6%, Kospi -0.4%, Sydney -0.3%. Oil steady at $77.50/bbl.
