Asia Session

Today in the Asian session the Euro was hit with a ''one, two'' punch combination in the guise of a Nikkei report stating that Russia would request negotiations with European and other banks to possibly postpone the repayment of up to $400 Billion in private sector debt. The paper also stated that negotiations had already begun with some banks. The second punch came in statements by ECB member Weber that the European Central Bank should not refrain from cutting interest rates ''aggressively''. Needless to say the above combination sent the Euro to the canvas against the US Dollar and the Yen. After beginning the session at highs above 1.3000, about 85 pips lower than the NY highs, the news was absorbed and the EUR/USD just collapsed. The pair, lacking all self respect, dropped from the 1.3000 levels to near 1.2820 in the matter of 2 hours. After a quick reversal to the 1.2880 region, the pair hit new lows of 1.2809, and denials of the Nikkei report from Russia pushed the Euro back near the 1.2880 level as London logged on for the trade day. The EUR/JPY followed the same path, dropping from around 119.00 to just over 116.60 during the session, with 117.50 levels entering London. The other Yen crosses were mostly pushed around by speculation about the upcoming bank rescue plan to be announced tomorrow in the US. USD/JPY was relatively steady despite poor corporate news as it vacillated between 90.97 and 91.65.

The focus from here on in has to be the unveiling of the US Treasury's financial rescue package, set to be unveiled tomorrow in the US by Secretary Geithner at 16:00GMT. With so much speculation swirling of what will be included in President Obama's plan, the FX markets will surely react as the bones of the plan are laid out. Expect all markets to be poised to jump on any information deemed pertinent, it should be quite a ride.

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