Very busy end of week session in Asia driven by G20 comments and by risk aversion brought on by falling stockmarkets around the globe.

  • Global central banks cutting back on USD liquidity injections
  • New Zealand trade balance slightly improved but worse than expected
  • China wants to see exit strategy from economic stimulus drives
  • China will do whatever necessary to support global reserve currencies
  • Nikkei falls almost 3% led by financials like Nomura
  • G20 not expected to surprise market with any additional statements over the weekend
  • G20 to replace G8 as global economic forum
  • New Japanese finance minister says that government will not intervene in currency markets to lower JPY

A very busy Asian session began with GBP/JPY getting smashed, falling 230 pips in 30 minutes. The reasons were both technical and fundamental: the daily close below a previous low at 146.75 formed a double-top which led to heavy technical selling; and statements from the BoE (that they are happy with a weakening currency) and the Japanese MoF (that they will not artificially weaken the Yen) made selling GBP/JPY somewhat of a no-brainer.

Cable fell from 1.6060 at the NY close, quickly triggering stops below 1.5970 on its way to a low at 1.5915 when the GBP/JPY selling was at its most fervent. EUR/GBP traded to .9194 and hasn’t really backed off since. Sovereign bids have been noted in the cable but they have been fairly small.

Talk of significant Sovereign bids in the EUR/USD around 1.4605/20 has been partially confirmed in that the market has on three seperate occasions tried to break below but has been unable to do so. Stops are building now below 1.4600 from traders trying to pick a bottom and piggy back on the official buying.

AUD and NZD have taken a back seat to the high jinks in the GBP/JPY pairing.

Markets: Nikkei -2.9%; Shanghai -0.8%; Kospi -1.3%; HK -0.9%. Gold fell heavily during the NY session, falling back below $1000 and Asia has consolidated around $997/oz. Oil also fell in NY but has been steady at $67/bbl in Asian trade.

Ranges: GBP/JPY 144.40/146.75; USD/JPY 90.56/91.35; EUR/USD 1.4616/67; Cable 1.5915/1.6070; AUD/USD .8608/63; EUR/JPY 132.52/133.91.