Asian session – Nikkei annihilated, Dollar and Yen surge
Volatility was extremely high, leading to panic and emotional selling in Japan after the nuclear crisis worsened. Japan's PM Kan alerted the possibility of leakage coming out of the damaged reactor at Fukushima after a third explosion in four days. People from a 30Km radius were being evacuated.
The Japanese Yen strengthened across the board, and despite the BoJ injected further liquidity into the market to ease jitters and guarantee stability, that alone could not avoid the Nikkei falling by -10.55%, adding to the 6% losses seen on Monday. The rest of market fell by 3% on average. The RBA minutes was suggested no rate rises in foreseeable future.
European session – European stocks on sell off mode, Yen and Swissy reign
Risk aversion continued to pick up further pace, leading European stocks to tumble drastically too, although ended off session lows. EUR/USD was down at 1.3880 from early 1.3930, having been as low as 1.3852. USD/JPY fell to 81.35 from early 81.55. USD/CHF down at .9210. Cable down a full cent to 1.6000.
German economic sentiment index 14.1, down from 15.7 in Feb. The situation in the Fukushima Dai-Ichi nuclear plant remained highly fluid, however fears eased slightly after weather agencies said Japan winds were dispersing radioactive material over ocean, no danger for Japan or region.
American session – Fed statements gives minimal clues, Dollar retreats
The FOMC gave little indications on where it might be heading in terms of monetary policy; no mention of QE3, QE2 to end on schedule, the Fed also upgraded its outlook to say that the economy is firmer, while rates to stay low for a considerable period. The only new remarks refereed to rise in commodity prices. Fitch downgraded Bahrain to BBB from A- after a 3-month state of emergency was imposed.
In the forex market, the Dollar gave back gains against the Euro, with the latter threatening 1.400 again. GBP/USD approached 1.6100. The Aussie regained 0.9900, while the Yen and Swissy extended gains, the second made new record lows at 0.9138. S&P 500 fell 1.1%, trimming early 3.75% losses. Oil declined $3.50 to $97.66, CRB down 3.5%; Gold fell $27 to $1397. US 10-yr notes fell 5 bp to 3.31%; off 3.21% intraday lows.