The sharp falls on Wall Street on Friday brought on by the disappointing jobs numbers and prospective debt woes for countries such as Hungary washed over into Asian markets. The Nikkei was over 4% lower at one stage and this of course had a very adverse effect on the ‘risk’ trades.

Liquidity was reasonably decent for a Monday and this has helped falls to be mainly orderly in the FX market. EUR/USD fell early in the session below 1.1950 but some standing orders at 1.1920/25 on the interbank platforms helped limit losses. Bounces were also shallow as the flow of bad news continued. The eventual break below 1.1920 saw a quick sell-off to 1.1878 and the market has since stabilised. Range: 1.1878/1.1966

USD/JPY fell steadily throughout the session as bulls, disappointed by this market’s inability to break above corportae selling, gave up the ghost. Stops are noted below 90.90 but the market tried twice to break below 91.00 and failed. The JPY crosses, EUR/JPY and AUD/JPY in particular, fell at times in a straight line. Ranges: USD/JPY 90.99/91.89; EUR/JPY 108.10/109.83; AUD/JPY 73.67/75.60

Sterling benefitted at times on the crosses from the simple fact that it was an alternative to the EUR. Both EUR/CHF and EUR/GBP came in for some heavy selling at times. Cable 1.4404/46; EUR/GBP .8239/85 EUR/CHF 1.3854/1.3916

The AUD was harshly treated at times in the risk-off environment but stalled ahead of re-testing the recent lows at .8065. Range: .8097/.8227

Markets: Nikkei -3.8%, HK -2.4%, Kospi -2.4%, Sydney -2.8%. Oil -2% @ $70/bbl. Gold flat at $1218/oz.