The US Dollar continued to impress in Asia despite Wall Street taking a beating in NY yesterday, thus reinforcing the fact that the dismal outlook for Europe may be more of the current focal point for traders. The DOW's 2% drop did set off a wave of selling in the Yen crosses, as GBP/USD, EUR/JPY, AUD/JPY and NZD/JPY all sold off early on, only to rebound a bit later in the session. GBP/JPY touched a 3 month low as it dove to a low just below 201.70, however, the AUD/USD took the brunt of it, falling from a session high of 0.8645 to dismal lows of 0.8561on the back of the cross selling in some thinner than usual markets. Stops helped to grease the tracks for the Aussie, and the Kiwi was not far behind, the victim of the above selling as well as a larger than expected trade deficit. NZD/USD fell from 0.7049 to 0.6967 initially, and was drubbed in a second wave of intense selling later in the day to push the pair to 0.6947.

EUR/USD made more moves south, as the pair cascaded down from early levels of 1.4759 to a 1.4701 low. Selling in early London trading pushed the pair further to levels near 1.4680. Many looked to the upcoming German data, GDP and IFO, and consumer confidence as a source for some position squaring, as well as the potential for more misery should the numbers disappoint.