Yen holds gains

USD/JPY and other JPY pairs continued to see volatility. Already up from 117.90 to 119.78 by the New York close, USD/JPY proceeded to trade down again. From 119.70, it fell to 119.18 with offshore players and intra-day specs selling into the rebound with risk still off and the Nikkei eyeing more weakness. Nikkei losses were confined to around the 1.5% initially however, and Gotobi Tokyo fix importer demand saw it bid up to 119.92. Stops were tripped on the break above 119.78 and the Ichimoku tenkan line at 119.80 on the way. More stops were eyed above 120.00 but the market reversed course. With the Nikkei off more in the afternoon, USD/JPY fell back below 119.00, hitting stops and down to 118.68. There was talk that GPIF and other semi-official Japanese funds bought below 118.00 last night, and more of such PKO-type action could be seen if USD/JPY falls sharply again. EUR/JPY and GBP/JPY mimicked USD/JPY moves between 147.15-148.25 and 186.13-187.80. AUD/JPY fell back from 99.27 to 98.75, making tracks away from its retracement high of 99.56 overnight. NZD/JPY pushed down from 91.91 to 91.48, also away from its retracement high of 92.15.

EUR/USD opened in Asia at 1.2375 after a volatile US session that saw it trade up to 1.2448 as USD/JPY collapsed before falling back below 1.2380 as USD/JPY bounced. Relatively quiet again in Asia, it see-sawed between 1.2362-97, again taking its cue from USD/JPY moves. The market came into this week very short EUR but a fair amount of paring of these positions has been seen since. Though fundamentals remain bearish, thinning liquidity is increasing volatility which in turn is encouraging more position adjustments. That said, selling extended rallies remains the favored strategy.

GBP/USD see-sawed between 1.5660-87 a la EUR/USD. EUR/GBP did little, holding between 0.7895-0.7902.

USD/CHF see-sawed between 0.9700-20 before falling back to 0.7895 as USD/JPY fell back below 119.00. EUR/CHF did little, holding between 1.2017-23.

AUD/USD opened in Asia at 0.8293, unchanged from yesterday despite very volatile price action in between. Offered into the US close with USD/JPY back on the bounce, AUD/USD bounced to 0.8307 early in Asia as USD/JPY fell back. Settling between 0.8285-95 into China CPI data, the softer than expected results led to another wave of selling. A low of 0.8264 was seen before buyers returned. A bounce to 0.8325 was seen late as USD/JPY again plunged.

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