- Chinese rate cut seems to have had opposite effect on risk sentiment, with traders now worried that tomorrows Chinese data might be worse than expected
- Japan’s Q1 GDP revised up to +1.2% QoQ
- Japan Capex revised -2.1% QoQ
- Australian trade deficit better than expected at $200 million
- RBA Governor gives speech on economy
- South Korea keeps interest rates on hold
- Nikkei falls almost 2% on option maturities and poor risk sentiment.
- Kospi -0.4%, Australia -1%; Shanghai and HK opened 0.5% higher after the overnight rate cut but have also fallen into negative territory
- Gold $1587/oz; Oil -2% to $83/bbl
The twilight zone was relatively quiet but risk sentiment took a huge turn lower right on the Tokyo open. Option-related selling on the Nikkei saw it open lower and this encouraged selling of risk pairs like AUD/USD and EUR/JPY. Selling was at times quite frantic and dealers say there was a big element of fear in the market. Bernanke’s failure to talk up QE3 and fear of poor Chinese data this weekend were the main drivers.
AUD/USD closed in NY below .9900 after a heavy sell-off post-Bernanke. Early Asian trade saw a modest recovery to .9915 but once Tokyo opened the selling came in waves, even ignoring decent trade data. Ranges: .9835/.9917
USD/JPY also saw big names selling in size, which was probably cross-related, and with heavy corporate offers expected near 80.00, the only way was down in early trade. Ranges: 79.35/76; EUR/JPY 99.46/100.26
EUR/USD fell quite heavily at times and only the talk of some decent sized bids near 1.2500 helped to improve sentiment. Greece, Spain, China all got an airing and all contributed to the risk off drive in early trade. Ranges: 1.2510/74
Cable 1.5480/1.5536; EUR/GBP .8078/97; EUR/CHF traded to a low of 1.2003
