Although the markets were far from busy today, there is a good deal of news and moves to digest as the session winds down. With the S&P lowering the credit rating of Spain to negative and an expected ECB .50bp cut due on Thursday, the Euro was aggressively sold across the board in late Asia trading. EUR/USD started the session near 1.3372 highs and melted all session until it fell off a cliff in late trading to rest at 1.3250 levels as London came online. The S&P also downgraded Ireland and Greece last week. Against the Yen, the picture was quite the same as Asian equities collapsed and risk aversion reigned supreme; EUR/JPY hit highs near 119.59 early and slid to 118.30 later in the session. Further proof of risk aversion was seen in AUD/JPY with a drop from 60.90 to close to 60.20. The AUD/JPY pair has dropped 8 big figures so far in the young year of 2009.

USD/JPY, to be put in perspective, started the year near 94.60, and moved from 90.00 to 88.90 in the past 24 hours…..In Asia, USD/JPY moved higher, bouncing from aforementioned lows, to just above 89.50. Word is that the BoJ is as usual, 'watching the FX markets', and in the Japanese government, PM Aso's approval rating has hit a record low of 18% The Nikkei was down close to 5% as of this report.

Down under the Kiwi dollar was crushed as once again the S&P came out and revised New Zealand's ratings outlook to negative. The result of the negative rating was NSD/USD dropping like a stone from 0.5770 highs to lows of 0.5590ish. The Kiwi Dollar was down about 2% on the day.

As the reality looks gloomier as 2009 unfolds, many are looking for the ECB to cut beyond the expected 50bp cut to perhaps 75bp or more…..stay tuned Thursday.

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