• RBA issues an upbeat assessment of the Australian economy. Their previous stance was considered a bit pessimistic by many so this was a readjustment more than a new direction.
  • CCB to reduce new lending by 70%
  • US Senate approves $2 billion ‘cash for clunkers’ extension
  • Fannie Mae still losing money and getting handouts from US treasury
  • President Obama offers upbeat assessment of US economic situation
  • Regional stockmarkets are lower by over 1% on average

There has been a slight whiff of risk aversion in the air but mainly we have seen positional adjustments ahead of tonights NFP. Cable was the big loser overnight and Asia has consolidated towards the base of last nights move. Early Tokyo saw some GBP/JPY buying which pushed cable back above 1.68 but this was short lived. The failure of AUD/USD to break higher after a bullish RBA statement introduced the first wave of JPY cross selling. This saw cable test its overnight 1.6750 low and AUD/USD test .8370 but both levels held. There has been no sign of reported Sovereign bids in the AUD/USD. EUR/USD has been relatively quiet with few orders close to the market.

Stop-loss levels to watch are; below 1.4300 in EUR/USD, below 79.25 in AUD/JPY, below .8340 in the AUD/USD and we suspect below 1.6740 in the cable but no confirmation there.

Heavy option activity is expected in USD/JPY on the approach to 96.00 with reportedly very heavy stops, mainly from option books, above 96.20.

Markets: Nikkei -1.25%, Kospi -0.6%, All Ords -1.2%, HK -1.6%, Shanghai -1.2%. Brent Oil steady $75/bbl, Gold $961/oz.

Ranges: EUR/USD 1.4342/73; Cable 1.6747/1.6812; USD/JPY 95.22/55; EUR/JPY 136.58/137.29; AUD/USD .8366/.8423.