Currency Updates:
U.S. Dollar Trading (US) extreme volatility gripped the market on Monday as traders reacted to the S& P downgrade for US long-term debt. The historic downgrade sent US stock futures down 300 points at the Asian open but this has been largely reversed as we enter the European session given an emergency G7 meeting and aggressive ECB action. In US stocks on Friday, DJIA +60 points closing at 11444, S& P -1 points closing at 1199 and NASDAQ -23 points closing at 2532.
The Euro (EUR) opened strong, trading above 1.4400 on the EUR/USD given the US rating downgrade and talk over the weekend that the ECB would expand their bond buying to include Italian and Spanish debt. This initial bounce was reversed during the Asian as the EUR/JPY reacted to the heavy stock market sell off and EUR/CHF fell on safe haven demand.
The Japanese Yen (JPY) gapped lower on the USD/JPY from Y78.50 to under Y78 but found support on BOJ/MOJ comments that G7 will take appropriate action on FX and keep markets liquid. Intervention risks are noted under Y78 and could prompt sharp movements higher similar to Thursday and Friday last week.
The Australian Dollar (AUD) The Aussie was sold aggressively today in Asia as the risk sensitive currency broke key support at 1.0380 and tested 1.0300. AUD/JPY is close the Y80 level a very important support in recent trading history.
Oil & Gold (XAU) surged above $1700 to all-time highs as the alternative currency found fresh buying on the US rating downgrade. Oil fell another $3 a barrel in Asia towards $84 on concerns the global economy was slipping towards recession given a global debt crisis.
