Japan on holiday, and Libyan Crisis is still the headline

This weekend we saw an escalation in the crisis in Libya and Japan’s nuclear issues are still a concern. On Saturday, military action was launched against Libya and the US and French defense authorities went on record saying a de-facto no fly-zone is in place through the country.  The USD and JPY have suffered from higher oil prices and its hard to predict how USDJPY will perform.

EURUSD rallied after Libya announced a cease-fire, but the situation remains uncertain.

There was no follow through joint intervention, so we saw USDJPY retreat to levels below 81 this morning. With Japan out on holiday today, expect a thin market. Rumors over ECB intervening in EURJPY saw the pair rocket up to 115 before settling lower as USDJPY momentum stalled.

AUDUSD lagged behind as China raised its reserve ratio by another half a percent. But we see AUDUSD rallying upwards at the moment.

BOE policy decision minutes will be released this week as well as the budget.

It’s been a relatively quiet asian market, with the Aussie rallying above parity. I do expect some volatility when Europe and the U.S open. Keep an eye on the news today on any updates from Libya and Japan. Also Trichet speaks today, so we may hear some comments today too.

Data Today

US Existing home sales – 2pm GMT

ECB Trichet speaks

Happy Trading!

FxTaurian