The market ignored the good GDP data out of Japan which would reinforce the fact that the world economy is in recovery mode. Instead it focussed more on issues surrounding banking and regulatory reform whcih are driving players to liquidate positions.

The AUD was again the focus of attention and it fell quite heavily against the JPY on the Tokyo open. The market even focussed on election polls suggesting a possible hung parliament, even though the said election is months away. Another indication of the markets mindset. Ranges: AUD/USD .8405/95; EUR/AUD 1.4590/1.4670; AUD/JPY 77.00/78.00.

The EUR/USD closed in NY around 1.2400 and rallied early as traders prepared themselves for another bout of short-covering. The failure to break above offers at 1.2430 reversed this action as did EUR/JPY selling on the Tokyo open. Ranges: EUR/USD 1.2325/1.2429

Cable has followed the EUR around in a broad 80 pip range and dealers expect little major activity until the big option rolls off later today. Ranges: 1.4377/1.4460, EUR/GBP .8565/.8604

USD/JPY paid little heed to the strong GDP numbers and has followed the crosses in a 91.53/88 range.

Markets: Nikkei -0.7%, Kospi -0.1%, Sydney -0.3%. Oil +1.2% to $70.60/bbl. Gold +0.3% to $1198/oz.