Another risk-on session in Asia inspired by talk of a Chinese rate cut, more Fed easing and much stronger than expected Australian GDP. The one-notch downgrades to 6 German banking groups did weigh a bit on sentiment in early trade but was soon forgotten.

AUD/USD and AUD/JPY were again the two main drivers amongst the major pairs. AUD/USD opened around .9740 and the market was soon aware of some sizeable stops in AUD/JPY above 77.10. The comments from Fed’s Evans (a noted proponent of expansionary policy) got the risk trades moving and newswire reports on the China Securities Journal article regarding lower Chinese rates certainly helped. Further fuel was added by the WSJ article on Fed policy but it was the GDP number which really got the market moving. AUD/USD was trading at .9780 and AUD/JPY at 76.90 but both accelerated higher on the much better than exdpected GDP number. Heavy stops were tripped in AUD/JPY, taking it to a session high above 77.60 and AUD/USD finally stalled near the usually important 21-day MA. Ranges: .9734/.9861; AUD/JPY 76.65/77.75

USD/JPY edged lower in early trade after opening at 78.75, with the Fed comments weighing on USD sentiment, but it has gradually moved higher on some heavy short-covering in the AUD/JPY and EUR/JPY. Ranges: 78.58/85; EUR/JPY 97.89/98.53

EUR/USD has mirrored the AUD/USD only to a slightly lesser degree. The Moody’s ratings move on German banks sent EUR/USD to its session lows in early trade but the gradually improving risk sentiment allied with stop-loo buying in EUR/JPY has turned it around. Ranges: 1.2438/1.2508

Cable: 1.5370/1.5430. EUR/GBP .8088/.8108