• Ireland’s FinMin Lenihan: The Irish banking system is at rock bottom today
  • Ireland’s FinMin says There Are Limits to Ireland’s Borrowing Capacity – BBC
  • Irish FinMin says Bulk of Allied Irish Banks’ Capital Requirements Will Come from the State
  • Irish FinMin says Ireland Dependent on International Goodwill
  • Irish FinMin says Will Set out Realistic Options for Dealing with Fiscal Deficit
  • EU’s Juncker says has not got the Impression Ireland will have to use Euro Rescue Mechanism
  • Moody’s Downgrades Spain to Aa1 from AAA
  • Spain Satisfied With Moody’s Evaluation of Fiscal Measures – Econ Secretary Campa
  • Moody’s Spain Downgrade “Excessively Pessimistic” Says Econ Secretary Campa
  • German Sept S/Adj. Jobless Total -40k to 3.146mln
  • German Sept S/Adj Jobless Change Compares With Reuters Consensus For -20k m/m
  • German Sept S/Adj Jobless Rate 7.5% Vs 7.6% in Aug
  • German Sept Unadjusted Jobless Total Falls By 157k to 3.03mln from 3.19mln in Aug
  • UK lenders see stable Q4 credit supply, lower defaults – BOE
  • Japan MOF Sakurai Suggests Govt May Discuss BOJ Law Changes
  • Japan MOF Sakurai: MOF Will Take Decisive Forex Steps if Needed
  • BOE’s Posen – Question is Whether UK Gets Sustained Recovery- Media
  • BOE’s Posen – MPC May Be Able To Talk Me Out Of Voting For QE Rise, Not Foregone Conclusion
  • Taiwan C/Bank Gov: Asian Currencies Moving in Same Direction Because of Hot Money
  • Japan Conducted 2.1249trln Yen in Forex Intervention from Aug. 28 to Sept. 28 – MOF

Headlines courtesy of Thomson Reuters

EUR/USD was knocked lower on the open following the news that Spain had lost its AAA rating with a one notch downgrade by Moody’s. This news combined with an outline of the drastic state of the Ireland banking system (needs another $20bln more in capital) saw EUR/USD hits its intraday low of 1.3559. The pair ran into solid buying interest from Asian central banks (who had gain spent the Asian session once more buying US Dollars in order to keep their domestic currency weak). This underpinned the single currency and shorts taken on the Spain/Ireland news were eventually covered. Good German employment numbers helped but this was a month end flow/ACB driven market with EUR/USD eventually tripping the option barrier at 1.3650 and running to 1.3676 before settling just below. EUR/USD last at 1.3660.

USD/JPY remained under the hammer throughout the Asian session and into Europe. It has been death of a thousand cuts for the beleaguered USD/JPY who remain friendless in a dominant anti US Dollar environment. Stops below 50 and 30 were tripped with the pair spending most of the London session in a 83.20-30 range after having bottomed out at 83.16. The MOF eventually gave out a few warning signs but no one was listening. Intraday range 83.16-81; last at 83.34.

GBP/USD has remained firm throughout the session with most talk centered on a massive buy order at todays London fix for a European central bank with an amount in excess of Euro3bln being bandied around. GBP/USD struggled above 1.59 however with talk of sovereign selling interest. EUR/GBP was up nearly 70 points at one stage today perhaps confirming the London fix 3 yards buy order. GBP/USD has traded a 1.5787-1.5919 range so far today; last at 1.5914.

AUD/USD ran into a bout of profit taking in Asia following worse than expected housing data – well that was the excuse given but an overly long market booking a few profits was more to the point. The pair struggled back to 0.9700 but could not improve on its Asian high of 0.9715 and lagged EUR and GBP moves for a change. Intraday range 0.9659-0.9715; last at 0.9692.

Spot Gold hit another fresh high at 1314.85 an ounce, up nearly $6 from the NY close whilst the Nov Nymex light crude contract was up 58 cents or 0.74% from the NY settlement.

European bourses are mostly in the red led by the CAC down 0.7%. Tokyo and Sydney led the losers in Asia down 2.0 and 1.2% respectively. Shanghai bucked the trend closing up 1.7%.