Asian stocks drop following Wall Street's negative close on Friday with the Nikkei below leading the fall and trading below 10,000.

  • Japan's Nikkei is trading lower, below the key 10,000 mark for the first time since July pressured by the yen's continued strength against the U.S. dollar.  The USDJPY traded as low as 88.23 earlier, an eight-month low, with the yen gaining strength from increased risk aversion and exporters' buying the yen to  settle accounts before the end of the third quarter.
  • It came as no surprise for the markets to see the USDJPY drop below 90 as weaker-than-expected housing and durable goods orders data hurt risk sentiment.  However, worries of the pair breaking below its 2009 low of 87.10 is giving way for the market to price in weaker-than-expected earnings for Japanese companies due to the stronger yen.
  • In their final communiqué following a two-day meeting in Pittsburgh, the G20 stated that their economic recovery efforts have worked.  They pledged to continue supporting economic activity until the recovery has clearly taken hold and to clearly communicate credible exit strategies in order to reinforce confidence in the markets.
  • The Canadian dollar continues to weaken and fell the most versus the dollar since June on the back of falling crude oil prices, the nation's biggest export.  The Canadian dollar fell to 1.0991, the lowest since September 4.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD fell over 250 pips from last week's high of 1.4844.  Today's pivot point is at 1.4675 with the preference to enter into short positions at 1.4665.
  • The GBPUSD fell over 650 pips from last week's high of 1.6466.  Today's pivot point is at 1.5960 with the preference to enter into short positions at 1.5950.

Today's calendar and market movers:

  • German Preliminary CPI month on month expected to drop to -0.2%
  • ECB President Trichet is due to testify on the economy, in Brussels
  • Bank of Canada Governor is due to deliver a speech titled The Three Rs: Review, Reflect, and Reaffirm

Stocks:

  • US stocks closed lower for a 3rd day on Friday with the Dow down 0.44%, the S&P down 0.61% and the NASDAQ down 0.79%. 
  • As of 06:10 GMT the Nikkei is trading at -2.5% and the Hang Seng at -1.66%.