Even with Japan back in action after a long three day weekend USD/JPY failed to make any waves today, once again stuck in a stagnant range of about 25 pips. However, the yen crosses were all subjected to a selloff in risk, with EUR/JPY, GPB/JPY and AUD/JPY all dropping 55 pips, 80 pips and 70 pips respectively.
The selloff of risk was accentuated by a wave of profit taking in gold that dropped the metal almost $8 per ounce to just under $1158.00 by mid day. That low provided a pivot point which reversed the move and sent the hot commodity through $1168.00 to post session highs as investors looked to get into trades at perceived bargain prices.
There was no such turn around in the riskier currencies, as their declines continued as the day came to a close. A few reasons were noted for the risk aversion, including a published study by the S&P calling into question the health of some of the largest global banks who will need to eventually adhere to new capitalization regulations.
Another factor was a rumor that a German bank's majority owners would let the bank become insolvent. And finally, many traders looked to cash out on short dollar positions ahead of the US Holiday in what they believe is an oversold market.
Although the moves were by no means dynamic, the thinned markets helped grease the wheels in some moves. After flirting with 1.5000 in New York, the EUR/USD weakened from a 1.4960 Asia open to lows near 1.4930 heading into the London session. GBP/USD slid from 1.6615 to 1.6560 and the AUD/USD fell from 0.9255 to 0.9180 on the day.
The day ahead brings some noteworthy data, including Swiss employment, German Ifo, UK inflation hearings and then later in New York, US GDP, CB consumer confidence and finally the FOMC minutes to top it all off at 19:00GMT.
