With a myriad of potential risk events on the near horizon, investors were hesitant to remain short dollars and yen heading into the London session today. With the US second quarter earnings season underway as well as the first Greek bond auction since it’s bailout due up tomorrow all against the backdrop of European stress test results due next week, traders seemed hard-pressed to take positions in Asian trade today.

 Although risk did have a solid early morning run, pushing highs of 1.2612 in EUR/USD, 112.05 in EUR/JPY, and 0.8780 in the AUD/USD, the mood was stung by comments out of the Peoples Bank of China that Yuan appreciation will continue at a slower pace. Highs due to risk appetite quickly disintegrated to session lows. EUR/USD dipped to 1.2585, EUR/JPY hit a 111.35 low, and the Aussie dropped to 0.8720.

 Caution was in the air ahead of tomorrow’s 1.25 Billion Euro bond auction offer by Greece. This 26 week T-Bill auction represents the first time the debt laden nation will offer bonds to the capital markets since it received the bailout package, and will act as a barometer for Euro Zone confidence. The key level for this auction will be 5%, which is the rate that Greece borrowed funds from the joint Euro Zone/IMF bailout package. If the Greek bonds are issued at rates lower than 5%, it would surely be looked upon as a positive event for the Euro Zone and thus translate as Euro positive.

 As mentioned, this week is the thick of equity earnings reports on Wall Street, but prior to that we’ll have UK CPI, German ZEW sentiment, and Canadian and US Trade Balance due at 12:30GMT.