Risk aversion was back on the table today in Asia as reports leaked that stress test results will show that a large US bank will need over $30 billion in funds to stay afloat. The news hit the holiday thinned markets hard as investors rushed to the perceived safety of the Yen. USD/JPY sank from early session highs just under 99.00 to just over 98.00 on the news and EUR/JPY went from the 131.80 area to hit a low of 129.85 in a stop driven move. The Yen crosses were dumped across the board, thus helping the Dollar against the Euro where it gained a solid 80 pips as EUR/USD fell from the 1.3330 neighborhood to just under 1.3250. GBP/USD could not remain above the 1.50000 levels as it just barely dropped to 1.49900 after starting the session close to 1.50880. Both the Euro Zone and the UK have cash rate decisions due out on Thursday. Most expect the ECB to drop rates to 1.0% and the BOE to leave rates untouched at 0.5%. The Australian Dollar had an eventful day, as both retail sales and trade balance data came in much better than expected an the Aussie popped almost 50 pips higher and hit 0.7410 just as the ''stress test'' news broke, thus throwing water on that move. Subsequently, AUD/USD got as low as 0.7335 as the AUD/JPY was dumped in the face of the ominous news. US futures are currently lower and the Greenback stronger, but as we know this can be fleeting.....
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