- US Senate passes financial reform bill
- Stockmarkets recover after heavy losses early
- Japanese authorities ‘watching markets closely’
- RBA ‘checked rates’ during morning trade
The AUD/USD and AUD/JPY opened on their lows and fell heavily in early trade as a US investment bank sold. The RBA then rang around dealing rooms and this caused a scurry of short covering and the same US bank was then a notable buyer. The AUD continued to rise throughout the day despite the Australian sharemarket being 3% lower at one stage and when the stocks started to recover, the AUD rally gained steam. Ranges: AUD/USD .8077/.8366; AUD/JPY 71.90/75.60; EUR/AUD 1.5130/1.5465;
The EUR has also been volatile, although lagging the AUD somewhat. Short covering continued in the EUR/CHF and EUR/GBP, with the former gapping 200 pips higher on heavy option-related turnover. EUR/USD opened at 1.2475 and traded quietly for a few hours before starting to move higher on EUR/JPY buying. The EUR/CHF moves gave the next impetus and finally stops above 1.2620 were triggered in late trade. Ranges: EUR/USD 1.2455/1.2673; EUR/JPY 111.05/114.40; EUR/CHF 1.4350/1.4590; EUR/GBP .8680/.8773.
USD/JPY opened at 89.30 and again tried to break below 89.00 on the early AUD/JPY sell-off. Talk that Kampo was the big buyer around 89.00 dissuaded further selling and the verbal intervention from MoF officials helped fuel the rally in the crosses. Ranges: USD/JPY 89.04/90.35
Cable has been the quietest of the majors with most of the GBP focus being on EUR/GBP stop-chasing above .8750. Range: 1.4330/1.4456.
Markets: Nikkei -2.6%, Kospi -1.6%, All Ords -0.6%. Gold -$15 to $1173/oz.