The US Dollar was once again demoralized in Asia as it fell to fresh 13 month lows against the Euro. Investors continued to shun the greenback in favor of the higher yielding commodity currencies as the low interest rate in the US currency makes a favorable funding option. EUR/USD pushed to new 2009 highs near 1.4888, culminating a move in Asia that began in the 1.4830 ballpark. The push in the Euro helped to pull Gold to fresh all time highs just a few cents shy of the $1070.00 mark.
Over in Japan, the Bank of Japan left rates unchanged at 0.10% to no one's surprise, and mentioned that the economy was now on the road to improvement. A wave of sell stops dropped USD/JPY from 89.90 levels to just under 89.40 with a final low of 88.85 on the session. A deputy finance minister in Japan stated that the yen's gains were based on dollar weakness as opposed to yen strength. As well, the usual mantra was reiterated that the BoJ would not intervene in the yen, and that large swings in currencies were ''undesirable''. Despite the above comments, the yen did look strong as the crosses all headed lower, the EUR/JPY to the tune of over a big figure as it skid from 133.45 to 132.25 over the course of the day.
GBP/JPY fell by a similar number as it dropped from 143.20 to lows close to 141.70.
The AUD/USD continued to shine in Asia, hitting a fresh 14 month high near 0.9145 as traders looked favorably on better than expected Westpac consumer confidence data and a surge in commodity prices. Australia has become the first G20 nation to raise rates as it exits the worst global financial crisis of this generation, and most expect the hikes to continue. Conversely, many now expect the US FOMC to keep rates at current low levels well into 2010.
Tomorrow should be a big day in the US with the continuation of earnings reports, Retail Sales, and finally the FOMC minutes.
