The Asia session began the week with a move in Cable that proved to be the first domino in a series of currency moves that lifted the US Dollar to loftier heights. The proverbial spark in the powder keg was an option barrier at 1.8500 in GBP/USD, and once that gave way, the flood gates were open as the pair collapsed from 1.8502 to 1.8413 in a matter of mere minutes as stops were triggered in a holiday thinned UK market. The fall in GBP/USD continued later in the session to just a hair above 1.8400 as traders found little reason to buy the pair even at the discounted prices with the UK's GDP on Friday uninspiring at best, and the grim fact that growth has all but stalled a current reality. The new two year low in the pair reinforced Dollar buying across the board, anchored by a downturn in crude oil and gold prices. Even Warren Buffett, who usually has nothing good to say about the Greenback, is on board the Dollar rally, stating he had 'no bets against the Dollar'.

The EUR/USD followed the Pound lower, initially to a 1.4715 low, but just around lunch time in Asia, a new wave of stop losses pushed the pair to under 1.4700 to 1.4694. With a combination of lower oil and an anemic Euro Zone economy, the EUR/USD pair could continue to see pressure this week especially with German IFO and inflation data on the docket. Look for poor data to damage the Euro, as well look for any moves lower in oil to be once again a benefit for the Dollar.

With the price of crude oil dropping for its biggest daily decline since 2004 on Friday, in thanks to the faltering of Tropical Storm Fay, some Russian troop movement in Georgia and an overall decline in demand, Asian stocks all rallied as oil laid at $114.50 a barrel. USD/JPY popped back above 110.00 to reach a high of 110.27 as the Nikkei soared about 1.5% Japan's week will end with a ton of data on Friday, including unemployment, CPI and the BoJ's unveiling of a stimulus package to help business and consumers deal with the rocketing inflation. Information on the package is scarce, but it is said to be worth about 8 trillion Yen. There are no data releases in Europe today, and the UK is currently enjoying a bank holiday.