The Euro initially rebounds against the dollar from 1.4160 to 1.4220 on short covering, the modest decline of the yen and to the tone of the weaker dollar. The 1.4220 area was met with selling pressure to 1.4160 in the early hours of the European session. The Euro Dollar followed a similar pattern of the Euro-yen cross as it declines to 109.30. There were several comments once again from the Japanese officials on hawkish rhetorics: Japan's Prime minister Noda: ' On-going Yenappreciations excessive. Watching forex market rates closely.' 'Yen overvalued and will do utmost to stem yen strenght'. The Economic Minister Yosano: 'Yen rise doesn't reflect Economic Fundamentals'. BOJ's Shirakawa's testimony to the lower house saying: 'BOJ to take appropriate actions as necessary.' The move of the weaker yen is not only welcomed by the Bank of Japan, but those comments have actually been successful in keeping trades from buying the yen and thus preventing the rates from moving lower. The last BOJ G7 intervention on March 16, when Dollar Yen fell to 76.25 and the rates spiked up 100 pips immediately. The market participants have stayed on the sidelines on fears of selling the dollar and other yen crosses as there could be a joint BOJ G7 intervention anytime. Dollar Yen was a mere 25 pip range in Asia and early Europe today. Yesterday, the US Senate voted 74-26 for raising the debt ceiling until 2013 with spending cuts of $2.4 trillion in the next decade. Moody's said 'While the combination of the congressional committee process and automatic triggers provides a mechanism to induce fiscal dicipline, this framework is untested'. Moody's expects a stabilization of the U.S. Federal 'Debt-to-GDP ratio' to improve by the middle decade and not to be far from its projected level of 73 percent by the middle decade. We have several Central Banks meeting this week: The ECB meets on Thursday, with expectations of keeping their interest rates the same at 1.50% The BOE MPC also is expected to keep their rates the same at 0.50% The RBA Monetary Policy Statement will be released also on Thursday. The BOJ meets on Aug 4-5 with the highly anticipated intervention and talks about increasing their monetary stimulus. Nikkei is down 194 points to 9,650.58 (-1.97%) Hang Seng is down 425 points to 21,995.80 (-1.90%) S&P ASX is down 88 points to 4,345.50 (-1.99%) Shanghai is up 0.89 points to 2,680.15 (+0.03%) The 30-day exponential moving average rose from 1.4180 to 1.4205.

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