Yen was the star performer in overnight trade gaining more than three big figures from yesterday on repatriation flows ahead of the Japanese fiscal year end. After trading as high as 99.12 just two days ago USD/JPY fell to a low of 95.67 in early European session on rumors of large bond redemptions that drove EUR/JPY lower by nearly 300 points and dragged EUR/USD down all night long.

As expected the BoE cut the overnight lending rate by 50 basis points to 1.00% - the lowest UK rate in the 300 year history of the central bank. BoE cited the risk of a substantial undershoot in the country’s inflation rate and noted that the series of rate cuts will eventually have a significant impact on the UK economy.

Evidence of oncoming holidays was all around the currency market tonight, as trading slowed to a crawl and the economic calendar was essentially barren of any significant data. Nevertheless, the euro managed to stage a rebound rally pushing above 1.4000 once again as better risk appetite in Asian markets and the oversold conditions in the unit created a perfect set up for a short covering bounce.

In a liquidity starved session, the EUR/USD skyrocketed past the 1.4700 barrier in early European trade as momentum players ignored the worst IFO reading since 1982 and sent the unit flying after it tripped stops at the 1.4500 barrier. The breath taking ascent took place against the background of deteriorating economic conditions as the mantra of the currency market continues to be - yield, yield, yield.

EUR/USD got off to a strong start on the first trading day of the week, as optimism among Asian equity investors, whetted risk appetite pushing the pair to within a whisker of 1.3500 level in early European trade. Both Nikkei and Kospi propelled higher rallying more than 5% each on the day, boosted by a variety of factors from the expectations of bailout of US automakers to the more than 7% spike in Baltic Dry Goods index on Friday.