The Asian session was dominated by a strong bout of selling of JPY against both the USD and EUR with hedge and model funds behind the move which was also fueled by stops. USD-JPY rallied from lows around 93.50 to highs of 94.32 while EUR-JPY rallied from 132.91 to highs of 134.30. EUR-USD, as a result of the cross gains, rose from 1.4200 to highs of 1.4243 though traders are now reporting that long term holders of EUR are started to pare holdings on rallies. There was no apparent direct catalyst for the move but anticipated Toshin fund issuance on Friday helped underpin support for the JPY weakness. Japan’s trade surplus widened to Y508 bln in June and the first rise in 20 months. Asian stock markets were mostly higher, with the Nikkei reversing early losses as exporter stocks rose in line with JPY weakness. Oil held above $65 despite continued data showing excess inventory. An ex-PBOC official Wu Xiaoling warned of a bubble in real estate and stocks in China, yet ADB was optimistic, forecasting Asian growth to double in 2010.