- Britain is likely to be one of the big losers from any G20 IMF deal
- Thursday”s G20 meeting is looking increasingly pivotal
- China and Argentina agree currency swap
- Japanese spending drops, jobless rate rises
- China’s growth outlook cut
In a complete 180 degree u-turn on yesterdays trade in Asia, EUR and AUD led the way higher against both the USD and the JPY. Increasing speculation that the IMF might greatly increase it’s funding through an agreement with China (and in the process reduce the importance of the USD as the worlds reserve currency) has been the driver behind the USD selling and as the EUR/USD and AUD/USD rose, so too did the short covering in the JPY crosses. It was not really a case of risk returning to the market, more a case of one thing leading to another. There will be much more on this G20/IMF story in the coming days for sure.
Sovereign names have been seen on the bid in EUR/USD, AUD/USD and GBP/USD although they are also likely to appear on the offer should these pairings rally appreciably. There is talk also of major USD-selling flows at the end-of-month London fix but once again without verification.
Gold is steady in Asia at $923 and Brent crude recovered some of yesterdays losses, currently trading at $49/bbl. Asian regional stock markets were mixed with the Nikkei flat, Hang Seng +0.4%, Shanghai -0.4% and the Kospi +1.3%.
Ranges: EUR/USD 1.3175/1.3273, Cable 1.4241/1.4340, AUD/USD .6785/.6895, USD/JPY 97.22/98.23 and EUR/JPY 128.24/130.63.