China once again emerges as the key focal point of currency markets in Asia as traders bought the safety of the Yen in response to news that possible cuts to Chinese production may put a damper on equities. China's government announced that it was looking into cutting down on overcapacity in certain industries, including cement, wind generators and steel, thus pushing Asian equities lower. The Chinese CSI 300 later followed, pulling the yen crosses lower in its wake. Chinese stocks have been the prime mover of risk as of late in Asia. USD/JPY dropped from its early perch near 94.25 to sink below 93.60 lows by session end as traders sought the perceived safety of the Japanese currency. GBP/JPY's footing was lost at opening highs of 153.18 and didn't stop until just over the 151.70 level, posting a six week low. EUR/JPY did not fare as bad, shedding less than 120 pips on its trip lower from near 134.40 to near 133.25. Some traders felt that the moves in Yen were also attributed to the perception that the current risk rally in equities was overbought and due for a correction. The Aussie and Kiwi dollars also weakened against the yen by about 75 and 80 pips respectfully.

Once again, over in Europe, the single currency moves against the US Dollar were lackadaisical at best. EUR/USD traded between 1.4220 and 1.4255 for the day, seemingly saving all its dynamic moves for London and New York traders. GBP/USD fared no better, trading between 1.6210 and 1.6250 in what equated to a 40 pip range for the session. The Aussie and Kiwi dollars were range bound as well against the dollar, and all the above pairs ended mostly flat on the day.

It would seem likely that the Asia will continue to be led by Chinese equities until a new motif is found, thus it would be wise to keep an eye on China if you plan to trade during Asian hours. Tomorrow brings top tier US data in NY in the form of Preliminary GDP and Unemployment claims.