An entire session of JPY cross selling was undone in minutes after the Dubai government announced that they will authorise the payment of the $4.1 billion Sukuk bonds which are due today.
- Regional cooperation and restructuring may avert debt defaults in Dubai
- USD/JPY and JPY crosses fell early in session after heavy selling at the fix
- Japanese business sentiment continues to drop according to latest Tankan report
- NZ retail sales and home prices stagnate
- Australian commercial finance falls 16.3%
- Regional stock markets were mixed with only small movements either way
- Gold adds $6 to $1126/oz
A very quiet morning only livened up with the release of the Tankan report which showed another dip in Japanese business sentiment and this in turn encouraged a bout of selling on the JPY crosses. Decent selling flows at the fix also emerged.
USD/JPY fell from 89.25 to 88.40 during the session but the statement on the Dubai credit situation turned the sentiment very quickly and forced shorts to cover. AUD/JPY and GBP/JPY were the big fallers on the crosses but those losses were also wiped out in minutes. Ranges: USD/JPY 88.38/89.32, EUR/JPY 129.15/130.60
EUR/USD tried to break below 1.4600 on a number of occasions but despite the heavy cross selling, it was unable to do so. The bounce has been very sharp as shorts ran for cover. Range: 1.4600/77.
Sterling and AUD were the major losers in the morning session but again these losses have been reversed in the afternoon, with some interest in the case of cable. Ranges: cable 1.6192/1.6318, AUD/USD .9056/.9118.
Markets: Nikkei -0.25%, HK +0.3%. Gold +0.5%, $1126/oz.
