The JPY crosses go up in late London and NY, slide in Asia and early Europe, and then do it all over again. That at least has been the trend this week. EUR/JPY and GBP/JPY are close to the bottom end of their session ranges although it must be said that these ranges are very tight and interest is again very low.

EUR/USD is holding up, presently at 1.4760. Reports have ACB continued buying supporting the pairing. Talk of stops gathering up at 1.4775/80.

EUR/USD has advanced to 1.4760 at writing, the move reportedly supported by Asian central bank buying.

Cable is off to a good start, tacking on a quick half a cent., presently at 1.6475. Resistances now come at 1.6480/85, psychological 1.6500 and then 1.6520/25. European stocks are set to open higher, risk appetite looking in ok shape, and this will be lending the pairing support. Not sure if there’s anything else driving move as yet, but looking bid. Given the huge uncertainty surrounding the Old Lady’s QE decision you’d think caution would prevail at some juncture.

USD/JPY is marginally firmer this morning, in subdued trade, presently at 90.20 from an early 90.00. European stocks are a little above water, while oil is up just over half a buck, with general risk appetite in marginally better shape than at the tail end of last week. This calming of risk aversion will be giving USD/JPY some underpinning. Sell orders are noted layered from 90.30 up through 90.60, with buy stops said to be gathering around 90.70. On downside, buy orders noted at 89.90/00.

(RTTNews) – The Canadian currency traded higher against most major opponents during New York trading on Thursday. Canadian industrial and raw materials prices unexpectedly declined last month as petroleum prices fell, official data indicated Thursday. The Industrial Product Price Index fell 0.5% and the Raw Materials Price Index dropped 1.1% in September compared to August, according to Statistics Canada. Economists expected industrial price to be flat, while raw materials prices were forecast to rise 1%. The loonie surged up further against the US dollar and the Japanese yen in morning deals and hit highs of 1.0658 and 85.87, respectively, at about 1:40 pm ET. After touching a 2-day low of 1.5922 versus the euro at about 6:30 am ET, the loonie reversed its direction versus the euro in mid-day deals today. At present, the pair is trading at 1.5841. Crude oil prices turned higher on Thursday, recovering most of the sharp losses seen in the previous session. Encouraging gross domestic product data boosted the prospects for energy demand. Light sweet crude oil for December delivery rose to $78.98 per barrel, up $1.52 on the session. Prices reached as high as $79.25 earlier in the session.

BOE’s Fisher says domestic output seems to have stabilised, with weaker sterling helping exporters. Cable giving up some of it’s hard fought ground, presently at 1.6475.

We’re having server problems today, sorry to say. Hopefully the site will be stable shortly. On the wires, France’s Lagarde, speaking in Beijing, says that both France and China want a stronger dollar (we’d like to hear the Chinese say that…)

USD/JPY having opened a little easier, is seeing steady trade in early Europe. We’re presently sitting at 91.85 having closed out in North America Friday up around 92.05. The market duly noted the aforementioned Financial news article with it’s call for China to increase it’s holdings of yen and euros, and this has served to pressure the USD/JPY pairing a little. However, would think increasng worries over Japan’s burgeoning budget and desire for better yield elsewhere among Japanese investors will help underpin the USD/JPY pairing.  Personally fancy USD/JPY to trade firmer over coming month.

If we are facing a W Shaped recovery, how do you think the FX markets will react this time? Will the dollar strenghten again (like the fall of 2008), or will the next downturn sink the dollar? If it is a W Shaped recovery, which currencies will strengthen in round 2? I suspect we will se the dollar plummet and the EUR and AUD strenghten. MikeyD

The COT Report has already printed a plateau in open interest and may exhibit a turn around based on extreme positioning of traders to one side.

From Desktop

For all you doubters out there I hope you start to listen to me sooner than later. I tried to tell everyone late yesterday to position themselves for a DOW pullback. If you only half-ass listened you would have made no less than a 50 pip profit in any USD paired currency. Maybe even more than 50, than is just where things currently stand.

Too much dollar weakness for a Monday! Look for lots of resistance in risk today. Now that the fix is in, I would look for some dollar strength from now until the close of NY.

Neither was I luv. Maybe I missed something? EUR/USD steady around 1.4935.

When EU finance ministers meet next Tuesday to discuss the rise of the Euro it will be interesting to see how the “potential bombshell in the background” will be treated if touched at all. The ongoing dispute between US and European regulators over the Basle II implementation and European banks´ reluctance to adopt US bank leverage ratio proposals is a potential threat, especially for Germany”s savings banks, hence they are naturally one of the prime opponents. They warn that the new rules could cause a credit crunch in Germany (and are not the only voice as we have heard from Mr Guttenberg and others in previous days). As banks have to divert cash from lending to loan reserves in order to meet the new ratios some of them might be foreced to “drop their panties” and what may appear might be really ugly. It”s been a well known fact for some time that Germany”s savings banks have been inadequately capitalised and were amongst the first casualties of the sub-prime crisis. So far this has been kept “under the surface” as much as possible and German politicians don´t like any headlines on this to appear. US and UK banks on the other hand have been shoring up capital levels by issuing debt and equity whereas their European peers have been dragging their feet or “sitting it out” as Mr Kohl would have done. As a matter of fact, leverage ratios in European banks are much higher than in the US, and they need to raise much more capital than US institutions were forced to do (potentially explains the current ECB policy). It seems as if European banks are hoping to ride the financial sectors” stabilization coattails without paying the price that US and UK banks did. Guess that won´t work out in the end and after all, leaving “bodies in the cellar” is not good for the global economic healing process. Global capital disparities will leave some institutions vulnerable until the next bubble bursts and it will be at least then, when Europe gets its real share of the current crisis, potentially creating another one. Better getting it sorted in the first place! Whatever happens during the discussions, currency markets might be up for some volatile sessions on any news filtering through and that is what a trader needs! Be prepared and I wish us all to be on the right side of things, good luck and a good start into the new week, Safe ; )

I’m loving the USD weakness and I would expect it to continue for at least the week.

Talk in market that Sainsburys have accepted a 420p a share bid from the Qatari Fund (can’t find confirmation myself so far). The possibility of positive M&A flows is helping support sterling, cable presently up at 1.6260.

OK OK, so the bloody middle eastern sellers weren’t so canny this time round. Cable up, triggers stops above 1.6225 and spikes to 1.6238. Technical resitance now 1.6250/55. Elsewhere EUR/USD has been down to test aforementioned support at 1.4900/05, presently back up a shade at 1.4915. EUR/GBP has continued lower which will be weighing on EUR/USD, the cross presently down at .9185. Some feel comments made by BOE’s Fisher in his FT interview possibly signal a pause in QE or maybe even the end of QE. I read the interview twice and certainly didn’t come away with the impression the bank was finished. They might pause, who knows. I thought he was playing his cards very close to his chest. And it should be remembered he’s only one member.

Cable struggling to hold above 1.6200 at the present time, presently at 1.6195 having hit 1.6223. As mentioned earlier Asian central bank sold above 1.6200. Now reports of Middle East names selling above 1.6200 as well. The latter are generally pretty canny when it comes to cable, so rally might have run it’s course, at least for now. Incase it hasn’t, talk of further stops on break of 1.6225.

The Reserve Bank of Australia sold a net A$830 Million in the spot FX market in September. No effect on AUDUSD as it continues higher towards 92c.