The new week in Asia saw some follow through from Friday’s poor showing in US equities and the brisk selloff of risk in the currency markets that accompanied it pushing the yen yet higher to start the week. With Asian equities faltering the yen was boosted by risk aversion and market chatter that Japanese exporters were aggressively buying the Japanese currency. Although volume seemed light with summer vacations in full swing, the USD/JPY lost almost 50 pips to touch lows near 85.70. EUR/JPY came close to hitting fresh eight week lows at 109.23, but fell short by a pip or two. The yen crosses lower theme saw lows of 75.95 in AUD/JPY, 82.05 in CAD/JPY, and 133.18 in the GBP/JPY. The Nikkei 225 was lower by almost 1% as the day wound down. A poor showing in Japanese GDP, which came in at 0.1% as opposed to the forecast of 0.6% cast a long shadow on the tone of the trade day.

After melting almost 3 big figures from Friday’s Asian session, the EUR/USD finally found a bottom today at 1.2732, a low water mark for the month of August. The low was reversed by mid day however as bargain hunters brought the European currency back to level near 1.2790. The GBP/USD saw a complete reversal from lows of 1.5535, as it approached fresh session highs over 1.5610 late in the day. A strong opening in Chinese equities to the tune of +1.0% helped to turn the risk sentiment around for the day. XAU/USD posted gains of almost $5 to register fresh August highs near $1219.50 per ounce.

Tomorrow the RBA monetary policy meeting minutes should spark some excitement into the markets early in the day followed by a speech by RBA Governor Stevens to close out the session.