The Nikkei is -0.5%, the Kospi is -0.4% but both HK and Shanghai exchanges are relatively flat. Gold has rallied 1.25%, copper is 2% higher after big falls last week and oil is also a little higher, 0.25%.

A 20-year deal said to be worth AUD 70 bln.

Gold holding $1050 so far and EUR holding 1.3600…

Update: EBS low at 1.3594. Gold reached $1044.75.

Gold is down to  $1062, almost $50 lower on the day. Oil is down over 5%, on the $72 handle once again. Copper is a relative strong performer, down only 3% on the day after a 4% slide yesterday. Contagion has spread to the emerging markets with Brazil off 4.7%. No real place to hide in a market like this, though the dollar and JPY are doing their best impersonations of safe havens.

• IMF Chief Strauss Kahn: Governments need to spell out how they will reduce their debt
• Shanghai share index down 0.3%
• Swiss trade balance +1360 mln in December
• Spain’s Economy Minister Salgado: No risk to euro zone.  Spain’s situation is very different to Greece’s
• Chinese Foreign Min: Chnia continuing to look at fx rate, we think it is at reasonable and fair level
• China Commerce Min: Will take shoe tariff dispute with EU to WTO
• EU says measures against China shoes taken on clear evidence of harmful dumping of Chinese products. It’s not about protectionism
• UK Halifax house price index +0.6% m/m, +3.6% in 3months to January vs yr ago, as expected
• German December manufacturing orders -2.3% m/m, much weaker than median forecast of +0.2%
• German Econ min: Recovery lost momentum after Q3 2009
• Bank of England leave rates unchanged, pauses QE

JPY and USD firmer on morning against backdrop of poor risk sentiment. European stocks lower, oil off close to 3/4’s of a buck, gold close to session low.

EUR/USD started around 1.3890 and was soon on the defensive. We did a little song and dance just ahead of well touted 1.3850 barrier option interest, but we didn’t have to wait too long for it to give way. Concerns regarding Greek, Portuguese, and to some extent Spanish budget deficits remain very much to the fore.

We got as low as 1.3827 before BIS buying helped partial recovery, presently at 1.3847. Barrier option interest now well noted at 1.3800.

Cable started around 1.5905 and came under early pressure. We got down to 1.5850/60 area and we did a little song and dance here as well, just ahead of touted 1.5850 barrier option interest. Eventually though 1.5850 gave out and we managed a session low 1.5806 session low just ahead of BOE announcement. The pairing stood around 1.5825 as the announcement came out and saw a subsequent relief rally when Bank left rates on hold and paused QE. 

USD/JPY sits at 90.80, little changed on day with yen seeing decent cross gains against the backdrop of heightened risk aversion. EUR/JPY is down at 125.75 from early 126.25. USD/JPY buy orders tipped at 90.50 and then 90.00/20. Japanese exporters seen up at 91.10/30.

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Looks like commodities are not too concerned by the RBA’s unexpected pause. Gold is up to $1116 (from $1075 late last week) and Oil is up another $2 at $76.50. We we’re on a $72 handle late last week.

The currency aspects of the reflation trade are relatively muted today with EUR/JPY still range-bound and AUD/USD suffering as a result of the RBA.

President Barack Obama is seeking a 12% budget increase for the Securities and Exchange Commission. 

The request to Congress includes nearly $1.3 billion for the SEC in the budget year starting October 1, 2010.    This proposal would allow for 390 hires, which would increase total staff to 4,190 from the current 3,800 at the traditionally low-profile agency, which was heavily criticized in the aftermath of the Madoff’s Ponzi scheme.   This proposal would also include $419 million for more than 100 new enforcement staff to work on the agency’s growing cases on fraud and market manipulation.

With the hires, the SEC estimates it could start 75 additional inquiries, conduct 314 additional formal investigations, file charges in 70 additional civil or administrative cases and conduct 50 additional exams of investment advisors, 25 additional mutual fund exams and 75 examinations of newly registered fund advisors. 

Of the roughly $1.3 billion requested for the SEC, $24 million is tied to the enactment by Congress of a sweeping overhaul of financial regulation. The overhaul would give the SEC new oversight of hedge funds and derivatives, the complex instruments widely blamed for hastening the crisis in the fall of 2008.

The SEC derives its funding from fees that companies pay to register new stock – an estimated $1.7 billion in the 2011 budget year – but the agency is subject to the congressional budget process in the same way as other federal departments.

The 12 percent budget increase for the SEC is significant because the administration’s record $3.83 trillion budget proposes spending cuts in some programs outside of defense and homeland security in order to keep overall non-defense spending frozen for three years. 

It was the first budget proposed for the agency under SEC Chairman Mary Schapiro, who led the agency through its most expansive restructuring in at least 30 years.   “If enacted, the president’s request will do a great deal to help the SEC keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011”  Schapiro noted.

Shares in Toyota are 5% higher after they announced a safety fix and this has pulled the broader market higher. Gold is steady above $1100 and the heavy buying around $1075/80 from ‘funds in the know’ is having an effect. With India and China said to have a strong buying interest towards $1050, the bright stuff might be trying to form a base.

The Nikkei and Kospi are 0.4% lower, the Australian All Ords is -0.8%, HK is -1.25% and Shanghai is -1.9%. Gold and oil are 0.5% lower on the session at $1078/oz and 72.50/bbl respectively.

I guess I’m curious more than predicting anything here.  Could this be a double bottom forming on gold at the $1074/oz level?

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