• G8 foreign ministers: Ready to help Japan
  • Six poorer EU nations threaten to scuttle euro pact
  • ECB April rate hike questioned intraday; as euro recovered, confidence of hike returned
  • Fitch downgrades Bahrain to BBB from A-
  • Eurogroup’s Juncker doesn’t like linking Irish corporate tax and aid
  • Rumor of Tokyo Stock Exchange closure for balance of week rebuffed
  • Fed notes rise in commodity prices; recovery on firmer footing, QE2 to end on schedule; rates to stay low for a considerable period
  • S&P 500 falls 1.1%, trims early 3.75% losses; Nikkei futures recover more than half Monday’s losses
  • US 10-yr notes fall 5 bp to 3.31%; off 3.21% intraday lows
  • Oil falls $3.50 to $97.66, CRB down 3.5%; Gold falls $27 to $1397

The market we opened with in NY scarcely resembles the one we closed with… We opened the day with news that a pool containing spent nuclear fuel had become exposed to the air, compounding the series of nuclear catastrophes besetting Japan in the wake of the earthquake/tsunami.

Equity markets dove (S&P was down 35 points intraday), US yields tumbled 15 bp, the dollar regained its safe-haven status as euro slid to 1.3863…

And then it was over.Equity prices began to stabilize and the dollar lost its bid as quick as it came.

EUR/USD began its recovery, spurred by Mid East demand, buying by real money again, and covering of shorts taken on an intraday basis. We ground higher for much of the session, finally pushing above the 1.4003 highs that had contained rallies in recent sessions, reaching 1.4013 before stalling. Offers remain in the 1.4025/50 area.

USD/JPY slumped to post-quake lows at 80.60 during the US afternoon, just above an area of support in the 80.25/50 region on the charts dating back to last fall. Intervention rumors briefly made the rounds as did a rumor of a shut-down of the Tokyo Stock Exchange for the rest of the week. USD/JPY spiked to 81.20 but soon slipped right back as the intervention talk proved unfounded.

USD/CHF was sold heavily as the franc became the lonely safe-haven among currencies. It fell as low as 0.9130 and ends the day at 0.9160. Late EUR strength helped lift the EUR/CHF cross to 1.2830 from intraday lows at 1.2735.

AUD and CAD finished off their worst levels but remain in much worse shape than yesterday’s closing levels. Hopes for AUD rate hikes have turned to fears of a rate cut at the next meeting after dovish RBA minutes last night. The deepening Japanese crisis is prompting fears of a sharp decline demand for raw materials globally.

0.9815 was the US low, 0.9933 the high. USD/CAD traded at 0.9974 early, before sliding back to 0.9840 at the close.