[LFX]

The surprise selling yesterday continued overnight but at a less frantic pace and in FX the USD gains were reversed slightly. But EUR/JPY remains the barometer of risk and after touching 131.33 we open at 132.00. JPY broke 92.50 but bounced right back leaving market watching 91.50-92.00. The EUR has managed to hold yesterday’s ranges and so many are looking elsewhere for FX action – they will find it in GBP, NOK and AUD – all places where news drove action. So it will come down to the obvious – if yesterday market’s ignored bullish news will they do the opposite today and exaggerate bearish news?

The key for USD may shift from stocks to bonds as the US 10Y dances on the support – a move in yields to 3.25% may be enough to trouble JPY and even the EUR regardless of more talk about equities moving 10%. Think 1000 SPX was important – what about 980? But wait today will be about more data than just ADP – productivity is the root of USD support and its expected to be revised up again. Good news for USD but further trouble for the US consumer as its at the expense of wages likely. So the FOMC minutes and Service ISM and the Factory Orders – all those too will be enough back ground noise to make the overnight “quiet” seem a dream worth holding onto. EUR 1.4150, JPY 91.70 – those targets still seem intact from the charts and from the risk aversion that permeates the sheets.