The week in Asia ended with a bang for the Yen as it was aggressively bought on a news report that China would be raising banks capital requirements. The report, which used 3 anonymous sources, stated that banks had until August 25th to comply with a new ruling that would raise the bank's capital requirement to over the current 12%, thus forcing the banks to either tighten lending or raise more capital. The news pretty much pulled the rug out from under risk appetite, sending traders scampering to buy the Yen and the Buck. Asian equities were all lower on the day sans the Chinese CSI 300, but once it returned from lunch, the index began to lose steam. All US Futures were lower by the session's culmination. The moves in the Yen were ferocious, waking up a complacent marketplace as USD/JPY collapsed from near 94.30 to just under 93.50 to post a monthly low. The Yen crosses all fell in dramatic fashion as well, EUR/JPY from 134.50 to 132.90, GBP/JPY from near 155.65 to 153.60, AUD/JPY from near 78.50 to the 76.80's, and finally the NZD/JPY 63.80 to 62.80. All were big moves indeed.
Accompanying the yen strength came Dollar strength as traders looked for safety. EUR/USD shed about 60 pips to drop under 1.4210 for a low, and was helped lower by the move in EUR/JPY. Expect the possibility of more action later in the day with European PMI data that is due. GBP/USD fell almost a big figure from its 1.6517 perch and EUR/GBP marched to session highs over the 08650 level, just a few pips short of a monthly high. As can be expected in this type of scenario, the Aussie, Kiwi and Gold all traded lower. With all this action, it will be interesting to see how the New York session ends the week. Have a nice weekend.
Upcoming Economic Data Releases (London Session) prior expected
| 8/21/2009 | 7:00 | FR | PMI Manufacturing | AUG P | 48.1 | 49 |
| 8/21/2009 | 7:00 | FR | PMI Services | AUG P | 45.5 | 46.3 |
| 8/21/2009 | 7:30 | GE | PMI Manufacturing | AUG A | 45.7 | 47 |
| 8/21/2009 | 7:30 | GE | PMI Services | AUG A | 48.1 | 48.6 |
| 8/21/2009 | 8:00 | EC | PMI Manufacturing | AUG A | 46.3 | 47.5 |
| 8/21/2009 | 8:00 | EC | PMI Services | AUG A | 45.7 | 46.5 |
| 8/21/2009 | 8:00 | EC | PMI Composite | AUG A | 47 | 48 |
