The Japanese Yen pulled back from its highest levels against the US Dollar and the Euro on speculation that the BOJ/MOF will take action to curtail further JPY strength. Additionally, the Japanese Finance Minister Noda verbally intervened again today when he told reporters that he’s ready to take appropriate action on currencies when necessary; however he failed to provide any further details. This sent USD/JPY from 83.90 to 84.50 and EUR/JPY from 105.90 to 106.95. The comments further solidified a report out earlier today from the Nikkei English News that said the BOJ could hold an “extraordinary meeting” before the next planned meeting in September to discuss additional measures to loosen monetary policy further. They are considering boosting their lending facility that provides three-month funding at 0.1% to 30 trillion yen (from 20 trillion currently) and extending the funding period to six months as an alternative. However, the BOJ seems averse to lowering the policy rate from 0.1% or increasing their purchases of government bonds outright. The Nikkei 225 however seems to portray a different picture, it is currently down by another 1.8% today (-160 pts) to 8835.

Standard & Poor's added to the volatility when they cut Ireland’s credit rating one notch to AA- from AA. “The negative outlook reflects our view that a further downgrade is possible if the fiscal cost of supporting the banking sector rises further, or if other adverse economic developments weaken the government's ability to meet its medium- term fiscal objectives,” S&P said in a statement. This sent the EUR/USD from 1.2665 to 1.2615 and EUR/JPY from 106.50 to 105.90; however throughout the rest of the Asia session the Euro managed to overcome those losses, and then some.

The data front in Europe is light, but has potential to pack a real punch with Germany’s August IFO Business Climate, Current Assessment and Business Expectations which is scheduled to be released at 4am EDT.