That should anger many in Congress who have been pushing the Obama administration to more aggressively go after China for currency manipulation.

The BOJ may be forced to actively manage its currency along the lines of South Korea, Singapore, Taiwan, Malaysia, et al… That would lead to greater imbalances and a surge in the Japanese current account which will further distort US and European monetary policy as Japan looks to park the proceeds of its intervention into the capital markets of those economies.

Those global economic distortions are largely responsible for the mis-allocation of liquidity into every-riskier assets in order to try and generate meaningful returns in a low interest rate environment, setting the stage for another bubble and another crisis several hears hence.

Tools are needed to limit excessive exchange rate volatility, though he says he is not talking of fixed rates (thank goodness for that!). China needs to be part of that discussion, he says.

The recent surge in wheat prices highlights the need for discuss commodity price volatility.

While you’re at it Nic, could you do something about airfares and cable TV rates? Thanks, dude.

Very tame end to the week.

EUR/USD  finishes at 1.2710, basically spot on where it was when I clocked in.   Early pressure was met by real money purchases. And then when the pairing failed to sell off on accelerated US stockmarket losses, euro bears decided to take some profits.  Basically it was a none event.

USD/JPY marginally firmer at 85.70 from early 85.40.  Basically a bit of pre weekend short covering.  Some caution that Japanese authorities could soon come up with further fiscal stimulus and firmer US yields  lent support. 

That said, sell orders were noted at 85.80/00 and they easily curtailed the rally, session high being 85.85.

AUD ends up at .8923 from early .8875. Latest poll suggesting the government will win the election will have provided support.  Also of technical interest, the 100 dma at 8840 held the sell off.  Not surprisingly sources reported decent buy interest down at .8840/45.

Cable touch firmer at 1.5530 from early 1,5505.  25 pips in cable as we all know is no change.

Ya’ll have a very pleasant weekend now.  Catch ya on the flip side.

“Neighbours everybody needs good neighbours,

With a little understanding, you can find the perfect blend.

Neighbours, should be there for one another,

That’s when good neighbours become good friends”

Boy, used to love that programme. Wonder if it’s still going.

Market has noted reports that China is turning bullish on Europe and Japan at the expense of the U.S.

Technical support, superbly highlighted by Sean at 1.2735/40, has held the down-side.  Stops noted just below there before buy orders clustered down at 1.2700/10. Further stops below there.

On topside sell orders at 1.2825/35, which are said to include sovereign interest, have just about help the upside. More sell orders clustered 1.2850/60, with buy stops probably positioned not far north of there although haven’t got confirmation of level/s.

Swiss private bank was again seen aggressive buyer of the pairing in Europe earlier today.

US data due today:

12;30 GMT: Empire manufacturing for August, expected 8.25 from previous 5.08

13:00 GMT: Net long term TIC flows for June. Total net TIC flows

14:00 GMT: NAHB housing market index for August, expected 15 from previous 14.

Busy day, but at the end of it all there’s not a huge amount of change in the majors.

EUR/USD at 1.3190 from early 1.3165.  Inbetween the pairing came under fairly intense pressure as general risk aversion picked up.  Stops tripped through 1.3100 on way to session low 1.3075.  Much talk of buy orders lying in wait at 1.3050/70 and that helped recovery.

We sat just above 1.3100 as FOMC announced the results of its’ deliberations.  News of QE lite undermined the dollar and we got above 1.3200 in double quick time.  China then stepped in and sold above 1.3210 and that really was pretty much that.

Talk of decent sell orders out of Asia lying in wait up at 1.3250.

Cable up at 1.5855 from early 1.5755.  At once stage cable got as low as 1.5712, but talk of decent buy orders at 1.5700/10 lent support.  The pairing will have to survive event risk double whammy tomorrow in form of BOE quarterly inflation report/King press conference and JUne jobs report.

USD/JPY down at 85.30 from early 85.90. In between got as high as 86.24.  BIS sold above 86.20 and then large US automaker sold decent amounts helping send the pairing back under 86.00.

The announcement of QE lite by the Fed hit the pairing as US yields came lower.  We reached session low of 85.19 before marginal recovery.  Defence of 85.00 barrier interest still alive and kicking so it would seem.

USD/CAD rallied early. Started around 1.0330 and got as high as 1.0388.  However a large US custodial was seen very notable seller around the highs and that was that.  Then the same US automaker who sold USD/JPY turned up and clumped USD/CAD and we finish down at 1.0320.  Obviously the Fed’s QE lite weighed on the pairing as well.

The economic analysts said the 2009 damages dwarfed the level recorded for 2008 – 9.9bn yen – and represented more than the total amount of securities litigation for the whole previous decade.

The reason for such increase was because a few particularly big cases were settled, which involved unusually large payouts.  According to Nera, there was little change in the number of cases settled in 2009 compared to 2008.

However, the report emphasizes an underlying trend: the number of securities law cases has been increasing since 2004, when the rules requiring a plaintiff to prove the extent of damages were eased and the powers of the market regulator, such as the Securities and Exchange Surveillance Commission, were increased.

I wonder how that hearing is gonna go? Here to defend the Chinese point of view is former BP CEO Tony Hayward! Set your DVRs!

We’ve seen this movie before, in the 1980s. The target then: Japan. What ever happened to them?

Still 40% under-valued, but never been closer to equilibrium! Kinda like saying I’ve never been closer to being 7-feet tall…

EUR/USD is near the upper end of the days range, underpinned by solid risk appetite despite stubbornly high jobless claims. Traders say yesterday’s pullback in US equities could have been much worse and are taking comfort in the mild dip.