UK Loses AAA Rating, USD/JPY Soars On New Ultra Dove BOJ Chief

*Update HSBC February FlashManufacturing PMI misses at 50.4 vs. 52.2 f/c*

U.S. Dollar Trading (USD)
The Dollar enjoyed strength across the board Monday aftera myriad of news over the weekend. Late on Friday at the close of New York wesaw UK downgraded by Moody’s with the financial epicenter losing its prized AAA rating. The other major news over the weekend was the announcement from Japanese PM Abe that he would be asking ADB Kuroda to be the new BOJ Chief andthat Ultra dove will be his Deputy. Looking ahead, no economic data tonight.

The Euro (EUR)
The EUR/USD managed a small rally in the US sessionbut this failed and we are back under 1.3200 Monday with the sellers still incontrol. Some concern about a possible hung Italian parliament and the effectit could have on reigniting the European debt crisis has been noted as opinionpolls suggest a very tight result at the weekend’s elections. The Sterling (GBP) was in the spotlight as rating agency Moody’s cutits AAA rating to AA1 stable. The reaction so far negative may lead to a rallywith the cut widely anticipated and sell the rumor buy the fact a game often played with such announcements. This could play out if the UK government or BOE come out with hawkish comments or plans to reclaim its AAA rating sometime inthe future. Looking ahead, ECB Weidmann Speaks.

The Japanese Yen (JPY)
USD/JPY has been surging in the Asian session on the announcement of the BOJ Chief selections including Ultradove “radical’ Iwata as the Deputy. The Yen crosses all piggy backed on the USD/JPY move but we have seen substantial profit taking so far in Asia. EUR/JPY pops Y125 but failed at key resistance and has fallen back to Y124.00.

Australian Dollar (AUD)
The AUD/USD topped out at 1.0340 on Friday on the back of strong buying after RBA Governor Stevenstalked up the Australian economy and played down the high AUD. This is stark contrast to the currency wars seen around the globe lately. AUD/JPY surged this morning and is helping to keep the AUD/USD bears in check. Looking ahead, no economic data.

Oil & Gold (XAU)
Gold is getting support after heavy selling in previous 2 weeks with the Italian election uncertainty and fresh aggressive QE promises from Japan support the precious metals outlook. OIL/USD spent the day consolidating losses from Thursday finding support at the $93 a barrel level.

Pairs to watch

GBP/USD Buy the rumor sellsthe Fact? Or Sell the rumor sell the fact?

USD/JPY Bulls targetingY95 high of Y94.80 so far?

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