LONDON SUMMARY

London traders saw light volume and fairly tight ranges today, with no extension of the JPY cross selling done in Asia. The selling of the JPY crosses in Asia came on the back of a worse than expected Australian CPI release. The slide in the high-yielding currency prompted a USD bid tone and general fatigue in carry trade buying ahead of Golden Week in the market. (The end of April through around May 5th is called "Golden Week" in Japan since there are many Japanese national holidays during this period.)

On the London open, short squeezes of the Asian currency movers began to unfold, with AUDUSD climbing about 20 pips from the Asia lows around 0.8340. (A short squeeze is a situation in which a lack of supply and an excess demand for an asset forces the price upward. Short positions may be forced to liquidate and cover their position by purchasing the asset.) The JPY crosses also popped as USDJPY led the way, bouncing off the 118.45 level to around 118.65. EURJPY has stayed well-offered in front of 161.00 since the Tokyo fix, and there are likely offers building near the NY highs around 161.35. EURUSD has been stuck in the recent 1.3540-80 range for the time being, with stops likely building to both sides. As such, a breakout to either side may bring some follow through, perhaps to 1.3605-10 to the topside and 1.3500-10 on the downside.

Data was light with the absence of top tier economic releases. Swiss trade balance came in weaker-than-expected at CHF718 million vs. CHF1,254 million in February. In other markets around the world, the Shanghai Composite closed up +0.26% to 3,720.53 and the Nikkei closed down -0.02% to 17,451.77. Major European equity markets are currently trading mixed with moves less than 1% across the board for the early morning trade.