Asian forex market wrap: traders torn between conflicting signals

Sharp fall late on Wall Street leads to equity market losses in Asia Chinese GDP comes in at +8.9% Chinese economic researchers see inflation looming as major problem Gold steady around $1060/oz A late fall on Wall Street brought about by the downgrading of Wells Fargo was expected to see JPY crosses pressured during the Asian session. Dealers were then surprised by buying flows in early Asia, particularly in AUD/JPY, which were rumoured to be Toshin-related. AUD/JPY continued to gain despite the Nikkei being down over 1% in early trade. The release of Chinese GDP data, despite everything coming in on expectation, saw some AUD selling enter the market. EUR/USD has been fairly quiet for most of the session, trading in a 10 pip range for most of the morning session. A quick jump up on the Toshin buying couldn't sustain and longs have since exited the market. No signs of any major players in the market at current levels. Cable has also had a quiet day. GBP/JPY reached one milestone in the 50% retracement of 163/139.70 and this has encouraged some mild profit taking. Heavy sell orders are tipped in the cable between 1.6640/60 from Sovereign names and Middle East players. Ranges: EUR/USD 1.4984/1.5036; cable 1.6582/1.6637; USD/JPY 90.78/91.16; AUD/USD .9235/99. Markets: Nikkei -1.1%, HK -1.0%, Shanghai -0.1%. Gold steady at $1060/oz, oil at $81/bbl.