The IMF’s involvement in the backstop rescue plan for Greece has undermined the euro. Traders are concerned that no monies will be disbursed until Greece has exhausted all other financing options. Many feel a crisis is right around the corner, so why wait until the market turns off the tap? Fix the problem while it is manageable. Yield spreads tightened about 10 bp in the wake of the announcement, now around 3.15% over bunds.

USD/JPY roared higher today on hedge fund buying with heavy market talk that the Japanese postal saving system has been supporting the greenback under the table for the Japanese government. Given the fate of the Swiss franc during the Greek crisis, the move looks to have been a brilliant success. USD/JPY neared 93.00 late in the day before dipping to close around 92.70. 93.55/70 is the upside target.

Hedge funds continued to take profits in AUD/USD today, helping limit rallies in the morning and sending the pair down toward its 100 day moving average at 90.65 late in the day. 90.68 was the New York low.