By Chris Tedder, Research Analyst FOREX.com

Most of the action was centred on the yen and oil. Initially, it appeared investors were returning to JPY, but USDJPY failed to push through 80.00 and later rose beyond its overnight high. Overall, it appears investors are choosing USD over JPY. Oil slowly climbed higher throughout the session as investors brought it off its lowest level since mid-2011. On the upside, US Oil may find some resistance around 80.00. But, overall, we think there may be more negative sentiment in-store for risk assets, thus investors may have to wait a while for a sustained recovery in price of oil.

Elsewhere, it was a very quiet day for investors in Asia as they digested the overnight reality check for the market. Some risk assets managed to claw back some of their overnight losses ? categorised by very cautious price action. AUDUSD struggled to push through its 25% retracement level stemming from its collapse in the European and American sessions. It was a similar story for the euro which failed to gain much traction against the dollar.

There were no real headline data releases during the session. But we did see the release of NZ credit card sending figures, with a month-on-month increase of 0.4% - bringing the year-on-year figure to +3.9%. The kiwi, however, was consumed with overall risk sentiment and didn't react significantly to the news. NZDUSD was fairly flat for most of the session after utterly failing to break through 80.00 overnight and plunging to a low around 0.7850.

The question now becomes: what is next for Asian markets?

Recent price action in Asia has largely been dominated by sentiment stemming from Europe and the occasional headline from the US and China. It is not hard to see why this is. The situation in Europe, and to a lesser extent China and the US, has infected the world's financial markets like a virus, and the longer the crisis in Europe goes on the more the effects will be felt in Asia.

Before the crisis started, countries within Asia were in a better position to those in Europe and America, having not been as effected by the financial crisis and benefiting from huge amounts of stimulus being pumped into the heart of the region ? China. However, at the same time as the European debt crisis was unfolding Chinese officials were acting to rein in growth, thus there are significant fundamental hurdles for Asian assets to overcome. And, with no light on the horizon are Asian markets really in a position to recover?

Overall, given the threats facing Europe and the uncertainty surrounding the future health of the Chinese economy, we think it may be a while before risk assets in Asia can make a sustained recovery. After all, uncertainty can act as the biggest ceiling for price action.

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