• Merkel to form Center-Right Coalition.
  • EURUSD trades up to 1.4720 on the back of the Merkel victory.
  • RBA says downturn in Australia “mild”, interest rates to move higher.
  • Japan Finance Minister, Fujii, says recent FX moves normal. Accelerates USDJPY sell off.
  • NDRC: Confident China can overcome economic crisis.
  • Nikkei smashed down thru 10,000.
  • Gold lower at 988.50.
  • Fujii Backtracks, says currency moves becoming one sided in favour of a rising Yen. Prefers stable currency moves.
  • USDJPY pops up above 89.30 on the comments.

Probably the busiest days so far in USDJPY seen in Asia. It was a wild and volatile day which started with the EURUSD taking out stops above 1.4700 for a run to 1.4720 on the back of the Merkel win, only to end up over 100 points lower soon after. USDJPY started steadily but with comments from the new Japanese government implying that they will not intervene in the FX market, the sell off was soon under way. It fell away thru the much talked about bids at 89.50 like a knife thru butter. Stops were hit all the way down before eventually pulling up at 88.20. Support came via importer bids and profit takers which saw USDJPY rebound back above 89.00 and continue higher with backtracking comments from Fujii saying that the FX moves were one sided in favour of arising Yen.

Yen crosses also suffered, GBPJPY the most volatile, falling from 143.15 to 139.70 at one stage, before recovering to above 141.40. EURJPY followed the USDJPY lower trading under 130.00, but found support from importer bids into the Tokyo fix, helping it recover back above 130.50 in the afternoon. It found no support via the EURUSD though, it collapsing down thru Sovereign bids at 1.4620 and taking out stops under 1.4600 and 1.4580. Notable sellers towards 9300 in EURGBP also added to its fall.

AUDUSD found some early morning resilience via hawkish RBA comments but was no match for the sell off in AUDJPY, pushing the AUD back below 86c, in what turned out to be a 100 pip range trading day.

Ranges:

EURUSD 1.4559 – 1.4720

GBPUSD 1.5768 – 1.5972

USDJPY 88.22 – 89.65

EURJPY 129.80 – 131.81

AUDUSD 8582 – 8682

Goodluck,

Sam