Asia saw a relatively quiet day in Asian trading with momentary bouts of action breaking the silence. One of those moments was the Reserve Bank of New Zealand's rate decision. While the RBNZ's conclusion to keep rates unchanged at 2.5% was of no surprise to anyone, the mostly dovish commentary that followed sent the Kiwi dollar reeling lower. Talk of keeping the cash rate unchanged until 2010 and comments that inflation was presently of no concern sent NZD/USD from pre-data highs near 0.7280 to eventual lows in the 0.7160 region. AUD/NZD was propelled over 2 big figures, from 1.2300 to just over 1.2510 over the course of the day once the data was released. Despite the great strength of AUD/NZD, the AUD/USD only managed to scratch out perhaps a 20 pip gain on the session to 0.8990.
The overall theme today was continued risk aversion, with Asian equities lower to the tune of -2.5% in some cases. The yen gained ground on this follow-through from the NY session, most notably against the Pound and Euro, GBP/JPY collapsed from 148.90 to just under 147.70 and EUR/JPY slid from near 133.70 to 132.80 levels. The higher yielding Aussie and Kiwi dollars also gave up ground to the well bid yen. AUD/JPY shed 90 pips to 80.90 and NZD/JPY as well dove 90 pips to 64.70. USD/JPY hit a weekly low of 90.25 after poor US data again helped dampen enthusiasm over a quick global recovery.
Looking at the Dollar, it was able to continue its recent gains and post a new two week high against the Euro. The Euro hit 1.4683 per dollar early in the session but turned around to make positive gains for the day at current 1.4730 levels. GBP/USD was a bit steadier, as it struggled to stay north of 1.6400 heading into London.
Tomorrow's Advance GDP and Employment data should help to point the greenback in either direction depending on the outcome. Positive news for the US economy should send the buck lower, while any poor data results should keep the dollar on its recent path of gains amidst economic uncertainty.
