Dollar dominates and Yen rampant as Italy.....>

FOREX: Dollar dominates and Yen rampant as Italy prompts flight to quality

-JPY is, by a distance, the strongest performing currency in G10 as markets

extend their reaction to the political fallout in Italy. With Autumn elections

looking increasingly likely and the MS5/League vote share rising since last

week, Cottarelli's technocratic government (ministers are expected to be

presented this afternoon) will be highly problematic, leaving ministers at an

impasse. This has prompted Italian 2yr yields to undergo the largest one-day

rally since 1992 as Italy's bonds plummet across the curve.

-The risk-off has dented the EUR and GBP substantially, but Scandi FX is also

hurting, with USD/SEK touching a fresh 12 month high. USD's rally today puts the

index on track for a break of 95, a level above which the index hasn't closed

since July last year.

-Unsurprisingly, EM FX is all lower against the greenback, with US Treasury

yields slumping as markets favour safe havens. ZAR is faring particularly

poorly, falling well over 1% against the USD today.

-Data releases are few and far between, keeping the focus on Southern Europe.