It
was an especially thinly traded early Monday in Asia today with a
public holiday in New Zealand. Very early trade in GBP/USD took the
pair to lows around 1.0765, carrying on its cratering during Friday’s
trade. The early slump was soon recovered, GBP/USD ticked back to
just under 1.0850 as liquidity improved a little.

The
bounce back was short-lived though. Cable turned back lower to under
1.0800 again. Trade was relatively orderly but with sellers
prevailing until it fell under about 1.0750 when the bids were
getting hit more heavily. Selling accelerated as it dropped faster,
hitting lows under 1.0390 before bouncing a little. You’ll see some
‘fat finger’ and ‘flash crash’ explanations. These are on the
wrong track. While the move was extremely wild and fast the selling
was begun in response to fundamentals (the fiscally irresponsible
budget announcement led to a massive offloading of UK Gilts and also
the currency on Friday and that carried on here during the session)
and was exacerbated by ‘just get me out’ selling. It remains to
be seen if this is a capitulation move for GBP. Its hit its lowest
ever.

More
widely, it was a session of USD strength. Major FX broadly fell
against the USD. Much of that USD move has been retraced though.

USD/JPY
has maintained its bid tone though. As I update its just under
144.00. Bank of Japan Governor Kuroda is scheduled to speak soon
(0530 GMT).