- Rather quiet day overall with JPY crosses giving up some of their overnight gains
- EUR/USD opened the day around 1.4030 and USD/JPY around 93.10. Citibank technicals put out a sell recommendation on EUR/USD overnight.
- Early Asian trade saw some buying of EUR/JPY and AUD/JPY pre-Tokyo fix as dealers expected some significant Toshin-related demand. These investment vehicles were very disappointing, less than 10% subscribed, and this in turn led to dealers off-loading their long positions.
- Japanese wholesale prices continue to plummet sending Japan into a deflationary spiral once again.
- 5 year JGB yields hit a 4 year low and Pimco warn of more to come
- Regional stockmarkets little changed
- Citibank reorganises management, replaces CFO
USD/JPY is likely to be dominated by some large option expiries later today, the bigger ones around 93.20 NY cut we believe. Solid bids are seen at 92.70 and offers above 93.50 should ensure a range trading session. EUR/USD is also dominated by Chinas big option play though one source told me today that much of this activity will die off in the next week or two. 1.3850/1.4050 remains the range for now. Cable has recovered nicely and EUR/GBP continues to fall after a technical failure around .8650. That said, I believe there are some very substantial bids in the cross around .8525 or at least there were last night. Middle Eastern names are the big players here. AUD/USD has had a very quiet session with any potential Australian/China disagreement over the arrest of the Rio executives seemingly polite so far.
Ranges: EUR/USD 1.3965/1.4030, USD/JPY 92.77/93.18, cable 1.6271/1.6343, AUD/USD .7807/51, EUR/JPY 129.68/130.60.
Markets: Nikkei flat, HK +0.15%, Shanghai -0.15%, Kospi -0.1%. Oil $61/bbl. Gold $911/oz.
