We have a huge de-leveraging of risk trades in the last 48hrs. Then as Asian markets opened on 21st May 2010 two trades were bought in earnest. The AUD from lows of .80 to bounce within 30mins to highs of .82, the EUR is the incredible one here from 1.23 to 1.25.
Ok, you have oversold markets, but we also have massive risk aversion. This is Central Bank/s intervention at it's finest, note that the coming G7 meeting may try to stop speculation in the currency markets (so intervention will continue), one way of doing this is to try and squeeze short sellers (central banks will buy currencies). A socialistic/communistic way of supporting (unnaturally) the FX markets, as we are all aware of eventually fails spectacularly, or causes more uncertainty; thus encourages more selling.
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