Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Asian forex market wrap: wild gapping moves see EUR/USD break lower

  • A lack of liquidity on a break below 1.4250 saw the EUR/USD gap sharply lower in a matter of seconds
  • New lows below 1.4200 were seen before stability returned
  • President Obama's Health Reform Bill is in doubt after the Republicans win Teddy Kennedys old seat
  • China orders some major banks to limit lending for the remainder of the month
  • NZ Q3 CPI, -0.2%
  • Australia January consumer confidence +5.6%
  • Chinese GDP figures tomorrow expected to exceed 10%
  • Regional stockmarkets little changed
  • Gold loses 0.5%

A very quiet morning exploded into life when the EUR/USD fell from 1.4280, through 1.4250, to a low at 1.4189 all in a matter of minutes. The major reason for the fall was a huge conglomeration of stop losses below 1.4250 which caused the spike lower. The market has been unable to break back above 1.4250 since the break lower occured. The election result in the US and the Chinese banking news also created a large amount of uncertainty. Range 1.4189/1.4296.

Cable fell in line with the EUR/USD but EUR/GBP selling limited the fall. Barrier options at .8700 were breached but solid buying is still being reported. More stops are seen in the cable below 1.6290 and again below 1.6270. Range 1.6300/71 in cable and .8690/.8737 in the cross.

Risk averse trading after the EUR fall and the Chinese banking news saw the AUD/USD finally break below the .9170 support level. This was despite some strong consumer confidence data. Bids are now noted around .9120 with offers firming around .9250. Range : .9155/.9242.

USD/JPY was sidelined in a 91.07/35 range.

Markets: Nikkei +0.1%, HK -0.3%, Kospi +0.3%. Gold -0.5% to $1133.50/oz.