The US Dollar remained heavy in Asia as it hovered near NY lows for the majority of the day. Equities continued the strength begun earlier on Wall Street to the tune of 1% while risk demand followed the moves higher. With stronger demand for commodities and risk assets, the dollar continued to be sold to fund these trades due to its low interest rate and the assumption that it will not be changing anytime soon.
AUD/USD got an early boost after NAB business confidence showed its highest level since January of 2008 as it posted a +12 as opposed to the projected +14. With this strong showing for the Australian economy, many traders once again had faith in the possibility of a December 2009 25 basis point hike from the RBA. AUD/USD posted a 0.9320 high before profit taking pulled it lower to 0.9255 session lows. As well, NZD/USD enjoyed the view from a 0.7460 pinnacle, but was in tow of the Aussie as it eventually hit its floor at 0.7380.
The EUR/USD tracked the early gains from down under to break the 1.5010 level momentarily, but in due course found itself closer to 1.4980 heading into London. GBP/USD was relatively calm for the session, but did a straight line decline from 1.6750 levels to 1.6600 as Fitch commented that the UK was the G20 nation most likely to lose its AAA status. Later comments about the stability of the UK pushed the pair almost 60 pips higher.
The yen strengthened late in the day as equities erased gains and the UK credit rating story prompted a run to risk aversion. USD/JPY broke out of its calm sailing near 90.00 to post a 89.70 low, but that was as dramatic as it got for that pair. The moves in the crosses were a bit more severe, with EUR/JPY skidding 70 pips to 134.30 lows, and most notably, GBP/JPY collapsing almost 200 pips from just near 151.00 to 149.00 on the data.
Some notable data ahead in the London Session, including; German ZEW, and CPI, and UK trade balance. Tomorrow's session in Asia will bring a bunch of Chinese data including industrial production, CPI, PPI, retail sales and trade balance.
