Morning rallies in equities, commodities and carry trades from oversold levels have faded and risk aversion is in the drivers seat once again. Concern over House Financial Services committee chair Barney Frank’s attempt to make retroactive all kinds of new restrictions on TARP funds for banks is helping weigh on already wobbly sentiment.
As we write, session lows have been breached and EUR/JPY has fallen to 117.55. Next support of note is at 115.85.
Keep in mind, there were reports earlier today of BOJ interest to buy USD/JPY on dips. That could limit sales near-term if dealers take the threat seriously. If Japanese banks in Tokyo are active on dips, take it as a sign of BOJ interest. We’ll keep you posted.
