I’ve just been speaking to a wily veteran of the foreign exchange trenches, who has been about for more years than I care to remember, and he summed up today’s price action with two words “confusion reigns.” Well I have to admit that did make me feel a little better. We started off the day on a more positive note with stockmarkets in plus territory and money market rates falling (3-month libor in London falling 36 basis points to 4.06) and EUR/JPY steaming higher (reaching a high around 138.50) while the USD struggled against the European majors, with risk appetite seemingly tentatively returning. Then wham bam the forex picture turns on a dime for no apparent rhyme or reason with the JPY seeing burgeoning, across the board, strength and the USD gobbling back lost ground against the Europeans. While I know there is still much talk of ongoing deleveraging, despite slightly better sentiment, it’s the abruptness of the turnaround in the foreign exchange markets that has me somewhat flummoxed.