ASIA SUMMARY

Asia saw a wild session with dollar sellers in control most of the session. The dollar sell off was led by AUD/USD which was helped by an acquisition of Australia’s Rinker Group by Mexico’s Cemex. The news helped push AUD/USD to multi-year highs and above the highs made in December 2006. The market took the breakout in AUD/USD as a cue that perhaps the dollar still has room for more downside. EUR/USD broke through 1.3380 area resistance and rallied through 1.3400 but remains below last week’s highs. USD/JPY sold back through 119 but lagged the dollar move lower as EUR/JPY was bid in the move. EUR/JPY traded lower first but found support in front of 159 and rallied through the session highs and is poised to test 160 area resistance.

The dollar sell off may have also been helped by concern of retaliation by China as the US seeks to protect copyrighted goods. The negative implication for the dollar rests in the reliance of China as a lender to finance the trade and budget deficits.

We also saw the release of the Bank of Japan interest rate decision which came in at unchanged as expected. The focus for the JPY going forward will be any comments from this weekend’s G7 meeting.

Upcoming Data Release (UK Session):

Switzerland: (1:45am EST) Unemployment rate expected at 3.1% vs. previous 3.2%.

Japan: (2am EST) Bank of Japan Monthly Economic survey. Year over year machine tool orders previous was 16.5%.

Germany: (2am EST) Trade balance expected at 15 bio vs. previous 16.2 bio.

Australia: (2:30am EST) Foreign Reserves; previous was $68.2 bio.

France: (2:45am EST) Month over month industrial production expected .6% vs. previous -.3%.