Asia Session Today's Market Update

The early session calm was broken by a sharp spike higher in the US dollar, a rare sight indeed, but in this case the direct result of profit taking ahead of potentially volatile data later in New York. Early in the trade day, the EUR/USD skidded from 1.4070 to eventual lows near 1.4005 in a stop driven drive that helped pull the dollar back from the brink of recent lows. Other moves that followed included a drop in the AUD/USD from 0.9940 to 0.9890, and the GBP/USD touching 1.59700 on a 40 pip slide. Many traders were keen on taking profit from short dollar positions ahead of a speaking engagement from Federal Reserve Chairman Ben Bernanke slated for 11:15GMT. The speech, titled “Monetary Policy Objectives in a Low Inflation Environment” could potentially drop clues about the much anticipated second round of quantitative easing or so called “QEII” that has become the bane of the US Dollar.

The selling of the Euro against the dollar led to losses in the yen crosses, with the EUR/JPY falling 55 pips to 114.10 and the AUD/JPY dropping 50 pips to 80.50. The USD/JPY pair remained unmoved by the action in the greenback and remained contained in a less than 30 pip range between 81.60 and 81.30. Comments out of Japan regarding FX intervention were once again generally dismissed as most investors do not believe that the BOJ will intervene in markets ahead of next weekend’s G20 meeting despite them claiming otherwise. G20 members will meet in South Korea from October 22nd to the 24th.

On top of the Bernanke speech later in the New York session, the week ends with some heavy handed data out of the US including; CPI, Core CPI, Retail Sales, Core retail Sales, Empire State Manufacturing Index and Preliminary UofM Consumer Sentiment. Have a great weekend….