It was a carbon copy of yesterday with the AUD/USD falling in early trade but then being followed by a rally in the EUR/USD.

The AUD market was spooked by the RBA comments regarding the effects of the floods on GDP, with this signalling that any increase in rates is highly unlikely for months to come. AUD/USD fell towards support at .9810 but was unable to break lower as strong bids emerged near the lows. The subsequent bounce took the AUD/USD back towards .9870 but it has been unable to break above yesterday’s breakdown level. Ranges: .9806/74

EUR/USD slipped to a session low at 1.2965 when the AUD was sold off but just like yesterday it came charging back in the afternoon. Vague talk of big fixing demand later today in London spooked a market already unsettled by the risk event of the Portugese bond auction. Offers at 1.3015/20 held firm but traders report large stops above 1.3025. Ranges: 1.2965/1.3016, EUR/CHF 1.2630/78

Cable saw some decent flows today as some of the bigger players triggered stops above 1.5640. Ranges: Cable 1.5600/58, EUR/GBP .8306/24

USD/JPY has again traded sideways, this time in a 30 pip range between 83.09/41. USD/Asia was generally heavy for much of the day and this has weighed on the pair but GBP/JPY and EUR/JPY short-covering has given USD/JPY some support.