In Fukushima, officials using a helicopter with infrared equipment determined that the pools atop the plant's six reactors were below 100 degrees Celsius (212 Fahrenheit), the boiling point of water, easing concerns of further threat of radiation release from possible combustion of the spent fuel rods. As clean up and cooling efforts continue investor confidence is slowly returning to Japan with some analysts now forecasting that the country's GDP may suffer only minor damage declining in decimals rather full percentage points in the wake of the worst earthquake on record.
Meanwhile in Libya American and European military commanders are assessing the effect of the bombardment on Colonel Gadaffi's targets. Overnight 110 cruise missiles were launched, and one large airbase alone is reported to have been hit with 40 bombs. "Effectively a no-fly zone has been put in place," said Mike Mullen, US chairman of the joint chiefs of staff.
For the currency market the key question with respect to the Libyan operation is whether it will succeed quickly or turn into yet another Middle East quagmire. For now the overwhelming superiority of the allied military force appears to have arrested Colonel Gadaffi' plans to squash the rebels. However, the situation remains fluid and if it is not quickly resolved could continue to keep oil prices elevated putting massive drag on global economic growth in Q2 of 2011.
With no data on the economic calendar, trading may remain rangebound for the rest of the day with equity flows and latest reports from Libya likely setting the directional tone in FX. For the time being traders remain convinced that despite the turmoil caused by the recent geo-political events, the ECB remains committed to its tightening course and that dynamic is proving supportive for the EUR/USD.