With the Reserve Bank of New Zealand's rate cut now history, we have the BoE and ECB later today to finish this week's rate cut activity until the FOMC comes into focus next week. To jump start the Asia session today we had the RBNZ enthusiastically cut rates by 150 basis points to 5% to help pull the country out of recession. The NZD/USD pair dipped to 52.69 on the move, but soon plowed though to a 53.48 high as investors felt that the Kiwis were being proactive in trying to dig out of the credit quagmire by stringing together a series of aggressive cuts over the past 5 months.  A total of 350 basis points have been cut since July.

USD/JPY and EUR/JPY mirrored the moves in the equity markets, as early strength in the Nikkei saw Yen selling, but as the Nikkei sold off later in the session traders rushed to buy the safe haven Yen. USD/JPY jumped to 93.45 early and slid to 92.89 as the Nikkei was in the red for over 1%. EUR/JPY followed the same risk adverse path as it dropped from 118.89 to a low of 117.61.

The Euro and Pound both lost ground in subdued trading ahead of the imminent rate cuts. It is widely assumed that the BoE will cut rates by 100 bps from 3% to 2%, and the ECB will follow suit with a 50 bps cut to bring the Euro Zone key rate from 3.25% to 2.75% It can very well be expected that these cuts will surely not be last as recession looks to overstay its welcome in both Europe and the UK.

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