httpvh://www.youtube.com/watch?v=x-M9mwTGvWY

Japan continues to dominate the global media; both traditional and social and equity markets in particular are still keenly focused on the prospect of a nuclear meltdown in the near future. Following its 6.2% fall yesterday the Nikkei fell by over 10% this morning and we expect other equity markets to follow its lead once they open.

If Japan was the story of the morning then the MENA region was the story of the afternoon as while Japan tried to sleep Saudi Arabia sent troops across the causeway into Bahrain to help quell the popular protests. This is the only time that a country has called in troops from a neighbour to control its own people and it sent the price of crude, which had dipped in the post-earthquake market, higher by $2 a barrel.

The combination therefore of radiation leaks and MENA tensions has sent risky assets bombing lower overnight with the dollar finally showing up to the ‘haven’ party and putting on a cent versus the euro and pound, wiping out yesterday’s respective gains. Sterling is almost caught in the middle here but did benefit somewhat yesterday over further rankling with Ireland over its debt levels.

As we reported yesterday, Greece received a cut in interest payments on its EU/IMF bailout at the Fin Min conference that took place on Friday. Ireland did not however. It seems that the EU want certain ‘concessions’ from the new Irish government to make them less competitive. When we say ‘concession’ we of course mean a hike in their very low rate of corporation tax; something that became the centerpiece of the Irish boom from the year 2000 onwards. Negotiations may start in the coming days.

The Fed meeting has obviously been overshadowed by the events in Japan but still remains important as the dollar, and most currencies for that matter, are trading mainly on interest rate differentials. We expect them to continue to keep their asset purchase schedule going and emphasise that fiscal tightening may have a negative effect on the US economy. They speak at 18.15 GMT.

Latest exchange rates at time of writing