The Asian week ended with risk assets peaking in the early part of the trade day, but as they drifted off those highs, bomb blasts in two Jakarta hotels helped accelerate the move into risk aversion as traders sought out the dollar and yen on the news. After a good day in US equities and solid earnings from JP Morgan, risk appetite was in full motion in the second half of NY trading, but that enthusiasm hit its peak shortly after Asia trading began, as profit taking and cooler heads prevailed.
Many traders looked ahead to the ominous predicament of CIT Group and pulled back the risk reigns on speculation that tomorrow could be the end of the line for the troubled lender. Two bomb blasts in resort hotels in Jakarta helped push buyers into safe havens as death toll rose with every report as cowardly acts of terrorism seemed the likely culprit.
EUR/USD started the session near 1.4150 highs, but was slipping when the tragic news hit the wire, pushing the pair to a bottom just near 1.4090. USD/JPY was a hair above 93.90 but dropped under 93.50 for a low as the yen was bought in a risk adverse flurry. As can be expected, all yen crosses slid across the board with EUR/JPY, GBP/JPY and AUD/JPY all dropping a big figure from early highs. Most pairs were looking like they were regaining their footing as the Asian day wound to a close. Strangely, the Swissy did not surge higher like it used to in lieu of any geopolitical or natural disasters, USD/CHF traded higher for the day, adding 30 pips or so to 1.0760ish. Traders will be alert to the earnings of Bank of America and Citibank tomorrow as well as US housing data which should all play a part in how good of a week equities have, and in effect the perception of how investors view the state of the economy...Have a nice weekend.
Upcoming Economic Data Releases (London Session) prior expected
| 7/17/2009 | 9:00 | EC | Euro-Zone Trade Balance | MAY | 2.7B | 0.0B |
| 7/17/2009 | 9:00 | EC | Euro-Zone Trade Balance sa | MAY | -0.3B | 0.8B |
| 7/17/2009 | 9:00 | EC | Construction Output SA MoM | MAY | 0.60% | - - |
| 7/17/2009 | 9:00 | EC | Construction Output WDA YoY | MAY | -4.70% | - - |
