Asia Session

Today's session could be divided into two parts, the beginning, where the Dollar lost ground, and the very end, where the Dollar gained back some of that ground. With a rare colossal day in US equities that carried over to Asia, risk appetite was back in the market and the safe haven US Dollar was sold across the board. When times seem gloomy or uncertain as of late, the Dollar has been the safe harbor in the storm, but that works both ways as the Dollar is sold when the markets hit a happier note.
EUR/USD began the session near 1.2668 and pushed as high as 1.2736 in orderly trading, but then came the second part of the session.....China, which as of late has held the hope of the global economy, came out with horrendous exports data, showing that Chinese exports plunged 25.7% from one year earlier. The market reaction was decisive, as the Dollar as well as the Yen was bought frantically on the bad news. With such a drop in China's exports many feel that growth in that country will slow, and in light of the global economic situation, that is not good news. Now the EUR/USD, comfortable near 1.2729 collapsed to 1.2657 within 5 minutes, and subsequently hit a 1.2639 low before a 25 pip bounce in pre open London. Of note is that there have been murmurs that later today a speech by ECB member Liikanen will include hints of continued rate cuts below the current 1.5% in the Euro Zone. GBP/USD followed the same Euro path making gains to 1.3805 before the China news triggered stops all the way to 1.3670. GBP/JPY had a dramatic fall as well, almost 2 big figures to be exact, from 136.26 to a quick spike below 134.45.

USD/JPY walked its way to an early high of 98.85 and subsequently slid to 98.31 before the China data induced a 40 pip tug-of-war between the two ''safe haven'' currencies, eventually leaving the pair near 98.40 entering London. The biggest victims of the news from China were the Aussie and Kiwi Dollars, whose home countries rely on China trade, both currencies were brought down from highs on the news; the NZD/USD from .5059 to .4975 and AUD/USD from 06491 to .6399. With US equity futures currently up, it will be interesting to see if the US equities can sustain the current rally.

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