After a relentless rally higher that saw the pair climb nearly 500 points without pause, USDJPY finally saw some selling in Asian and early European trade dropping back towards the 9700 handle as profit taking kicked in on the final trading day of the week. Currency trader is Tokyo were geared for yet more month end corporate demand for dollars but when it did not materialize selling quickly ensued with USD/JPY falling nearly 100 points in a hour.

As the weekend approached in Asian and European trade the EUR/USD continued to drip lower over concerns about the viability of the currency and growing consensus that ECB will have to take rates below 2% in order to combat the creeping recession in the EZ economy. Yesterday’s comments by George Soros continued to reverberate though the FX markets in overnight trade as EUR/USD dropped through the 1.2900 handle reaching a low of 1.2835.

Another set of very dour economic data for the land of rising sun as household spending contracted very sharply to -4.5% versus -3.6% anticipated and unemployment rose to 4.4% from 4.1% eyed. To put the household spending numbers in perspective it must be noted that the contraction in the month prior was only -0.5% thus this month’s results are nearly ten times worse than November’s data.