Currency Updates

Aversion Assured...

(11:30 GMT - 4/12/2007)After majors declining against the disguised strength of the dollar, it is assured the investors now are running away from riskier assets and heading more towards safer assets. Risk aversion seems to be dominating the markets as the unwinding of carry trades is back in action. Markets have locked the fact that a rate cut will be definite in both the EU and the UK and the affect has surfaced.The Japanese Yen captured the spotlight today as it dragged the USD/JPY pair back to the 109.00 levels. Although the dollar seemed to be performing well in the early transactions it didn't have enough momentum to affect the pair. The pair recorded a high of 110.53 before recording a low of 109.70.The 13 nation currency was able to rebound against the dollar to record a new high for the day at 1.4724 after it reached a low of 1.4634. The Euro Zone released its PPI reading for the month of October coming in at 0.6% higher than both the expected and previous readings of 0.4%. As for the annual reading, it was released at 3.3% inclining from the forecasted reading of 3.0% and the prior reading of 2.7%. Still to come later this week is rate decision by the ECB where it is widely expected that the rates will be held steady at 4.00%.The dollar is losing it against the most active currencies traded as the Royal currency, similar to the Euro, was able to reverse the morning correction. With a fundamental free calendar for today, the sterling recorded a high of 2.0672 before hitting a low of 2.0586. The highlight remains the decision by the MPC where rates will remain unchanged at 5.75%.Unwinding of carry trades was also evident on the Canadian Dollar and the Australian dollar in the morning ahead of both central banks' rate decisions, but due to further weakening of the dollar, they gained slight momentum. The BoC and RBA rate decision are due later today where they both are expected to remain unchanged at 4.50% and 6.75% respectively.