The first move in the JPY crosses or risk trades was up. EUR/JPY and AUD/JPY rallied in early interbank trade to post their session highs. Traders had been wary of further announcements regarding regulatory reform and when none were forthcoming over the weekend, traders closed their positions. Comments from Australian mining company Rio Tinto drove the risk trades lower but big gains on the Chinese stockmarket and seemingly positive talks between the US and China drove the risk trades back up again. Net effect of zero.

Statements from Rio Tinto regarding the Australian commodity industry tax helped reverse the early positive sentiment. AUD/USD and AUD/JPY fell quite sharply at times but once hedge funds showed up below .8200 trying to book profits on existing short positions the market reversed quickly. Ranges: AUD/USD .8186/.8316; AUD/JPY

USD/JPY moved around inside a 60 pip range in line with the crosses. Range: 89.76/90.36.

EUR/USD enjoyed a relatively calm session with no major news to drive the market one way or the other. It moved around largely in line with swings in risk sentiment. Range: 1.2482/1.2559, EUR/JPY 112.10/113.27

Cable was unsure how to react to the news of the looming spending cuts or the BA strike, so it bascially did nothing at all. Ranges: 1.4417/98 and EUR/GBP .8635/74.

Markets: Nikkei -0.1%; HK +0.6%; Sydney +1.3%; Kospi +0.4%; Shanghai +3.2%. Gold +4$ at $1180/oz.