JAPAN & GERMANY in the spot light, with the Japanese making more ineffective talk regarding the yen and German Aug IFO due at 8 am GMT. More on IFO below. Talk that the the BoJ may hold an extraordinary meeting to consider additional monetary easing is not helping to weaken the yen, while Japan Fin Min Noda said MoF may respond unilaterally if yen moved by several yen against the USD. IFO sentiment index seen at 105.7 from 106.2, IFO expectations index seen at 104.4 from 105.5 and current conditions index at 107.4 from 106.8. EURCHF hits fresh all time low of 1.2985 before rebounding to 1.3050s, while EURUSD drifts around 1.2650s. It took a new event risk (S&P's downgrade of Ireland) to drag EUR to bew multi-week lows. We're seeing waves of sudden (but short-lived) selling in USD, stemming from growing talk of a double dip recession in the US, which would increase chances of a full-fledged QE2 by the Fed, thereby BOOSTING GOLD. This is the reason I warn against excessive gold selling during bouts of risk aversion and USD advances. EURUSD underpinned at 1.26,with remianing possibility of seeing a 1.27 print today. Watch whether IFO disappoiints across the board, in which case we;d retest $1.2580s.