- Chinese SOEs send legal warnings to 6 investment banks regarding commodity derivative losses
- Regional stockmarkets lose ground with a sniff of risk aversion in the air
- Lloyds bank scheme fails FSA stress test
- Gold steady in Asia after overnight fall
Sterling was the main mover in Asia and it seems to have fallen on the back of the Lloyds bank story which appeared in the UK Telegraph. Cable opened the session at 1.6450, held initially above 1.6420 as the market tried to figure out if the bids from earlier in the week at 1.6410/20 were still there, and then fell sharply through 1.6400 when they didn’t materialise. Cable fell to a low of 1.6359 before recovering somewhat but it has as yet not managed to get back above the 1.6410 breakdown level. EUR/GBP has also gained and is still close to its .8985 session high.
The fall in cable also encouraged some profit taking in EUR/USD. It fell from an opening level around 1.4740 to a low at 1.4696 but for the third time in less than 24 hours it was unable to break below 1.4690. I have heard no talk of big Sovereign bids so I suspect the market is generally trying to buy dips.
USD/JPY has been quiet in a 40 pip range but profit taking by existing short positions was noted as was the usual JPY cross selling with a falling Nikkei, GBP/JPY in particular.
AUD and NZD drifted a little lower but were not overly affected by the somewhat lower commodity prices and increased risk aversion, not yet at least.
Markets: Nikkei -1.1%, HK -0.6%, Shanghai -0.5%. Gold steady at $1013/oz, crude steady at $72/bbl.
Ranges: EUR/USD 1.4696/1.4744, cable 1.6359/1.6453, USD/JPY 91.05/44, AUD/USD .8681/.8725.
