The Yen made some positive moves to start the week in Asia, despite a horrible GDP which showed that Japan's economy contracted 12.7% annualized, the worst decline in about 35 years. The Yen was bought, (USD/JPY and Yen crosses sold), mostly on the fact that the weekend's G7 Meeting in Rome did not include any comments about Yen strength or intervention on the part of the BoJ.
USD/JPY's highs were early, 91.97 eroding into lows just near 91.40, a nice show of Yen strength as the poor GDP data was released and ignored, and the Japanese Finance Minister fended off accusations that he was drunk at the G7 meeting. If he was in fact drunk at the meeting it would be justified in lieu of the Japanese economy as of late, but that's beside the point. EUR/JPY peaked early at 117.75 and disintegrated into levels near 116.80 as the session progressed, poor equity performance also contributed to this move to risk aversion.
The woes in the Euro continued into the new week after Friday's drop in Euro Zone GDP, and the specter of an Eastern Europe banking failure dropped the EUR/USD over 80 pips on the open, and things got worse from there as the 1.2808 high was quickly forgotten and replaced by lows just under 1.2740 going into the London session. As well, a newspaper article stating that Ireland may default on its debt did not help the Euro cause. The G7 meeting in Rome did come to the conclusion that global markets were in a ''severe'' downturn, and that they would fight to reverse it although they offered no explanation on how that would or could be done. Of note is that Wall Street will be closed for the Presidents Day holiday tomorrow and President Obama may sign the $780+ Billion Stimulus Bill into law as early as Tuesday (US). Aslo look to the early week in the US for Obama to reveal a plan to help stem housing foreclosures. There is no data of note today in London.
Upcoming Economic Data Releases (London Session):
No known data in Europe today.
