Risk aversion continued to be the theme in Asia as traders took heed of subtle warnings by Fed Chairman Ben Bernanke and the possible insolvency of the US CIT Group, which has been flirting with bankruptcy for over a week. As investors looked for safety in the yen and greenback, CIT Group looked for a way to save the sinking ship if bondholders turn down a proposed debt restructuring.
USD/JPY began the day near 93.80 highs and dropped below 93.45 in subtle moves that brought the pair back towards opening highs as the day wound down. The Yen made gains to 132.50 versus the Euro and almost 76.00 against the Aussie but reversed the moves later in the day as Yen buying lost steam as players weighed the benefits of risk aversion in light of some good earnings and higher equities. The tug of war continues as traders look to decipher market interpretations of what is risk adverse and what is not.

EUR/USD spent the majority of the day heading lower from near 1.4230 to near 1.4175, but late in the day the Euro was paring its losses along with the Aussie and Kiwi Dollars. The British Pound dropped all session, but failed to turn around as it hovered near its 1.6390 lows amidst continued reminders in the UK that the crisis is far from over. Caution continues to present itself ahead of scheduled testimony from US Federal Reserve Chairman Ben Bernanke who will speak for a second day tomorrow, this time in front of a Senate panel where he will field a wide array of questions on the state of the economy.

Upcoming Economic Data Releases (London Session) prior expected

7/22/20096:45FR Consumer Spending (MoM)JUN -0.20%0.40%
7/22/20096:45FR Consumer Spending (YoY)JUN -1.60%-0.50%
7/22/20098:30UK Bank of England Minutes22-Jul
7/22/20099:00ECIndustrial New Orders SA (MoM)MAY -1.00%1.90%
7/22/20099:00ECIndustrial New Orders SA (YoY)MAY -35.50%-27.90%
7/22/200910:00UK U.K. CBI Quarterly Industrial Trends Total Orders22-Jul