FOREX NEWS | CURRENCY NEWS BY FOREXLIVE

Merkel says she and Hollande are seeking sensible solutions for the EU

• Doesn’t rule out difference between she and Hollande

Sounds like she is trying to rein in expectations of a breakthrough on euro bonds ahead of Wednesday’s summit.

No euro bonds would reinforce the status quo and the status quo is bearish for the euro…

UK’s Cameron says not enough has been done on crisis

• In Chicago, David Cameron says not enough action has been taken to resolve the eurozone crisis.

And I don’t think he’s volunteering for Britain to step up and do more.

This is why no one trusts Chinese data

Chinese officials were forced to apologize after this blatant photoshop was used on a government website.

Spanish PM: Fiancial stability in Europe more important than approving euro bonds

Looks like Rajoy has Merkel’s back…

EURUSD wiggles here and wiggles there

The EURUSD has wiggles a little higher. Wiggled a little lower. Now has wiggled higher.  Along the way, the price has disappointed the buyers (fail above), disappointed the sellers (failed below) and is now looking to keep the buyers happy on a move toward the 38.2% of the move down from the May 8th high to the low reached on Friday (at 1.26409 – close enough to the 2012 low at 1.2623).  That level comes in at 1.28024. Above that the 200 hour MA at the 1.28188 (and coming down) is the next key target (not surpassed since May 2nd).  Look for sellers against the level on the first test.

Are the buyers committed?  I will be watching the 100 and 200 bar MA on the 5 minute chart at the 1.2762 and 1.2773 levels respectively. Stay above and longs should feel inclined to stay in the game. Move below and the Dr Jekyl and Mr Hyde market may change it’s stripes again. 

Nikkei says Bank of Japan to maintain view of economy

The BOJ decision on Wednesday.

San Francisco Fed notes diminishing returns in QE operations

The San Francisco Fed published a short paper evaluating exceptional policies:

• QE1 led to borrowing rate decreases of close to one percentage point
• QE2 and Operation Twist lowered yields on Treasuries, MBS and corporate bonds by a “similar magnitude”
• But generally QE2 and Operation Twist affected interest rates much less than QE1, especially mortgage rates

This type of research isn’t a major factor for policymaking but, at the outer margin, it suggests that diminishing returns on exceptional policies makes QE3 less likely. Unfortunately, they lumped QE2 and Operation Twist together in the research, otherwise there might have been some more interesting takeaways.

Fed says QE1 lowered 10-yr yields 1%

Hard to say with any certainty but I’m sure they have a heavily footnoted study written by a team of PhDs to prove the case.

Brazilian central bank president says global economic growth disappointing

• Alexandre Tombini says the worldwide economy is growing less than expected
• Sees moderate expansion in the US
• Sees a soft landing in China
• Sees slow expansion in Europe for the next two years

If he’s seeing disappointing growth now and there are certainly downside risks to those forecasts.

US unemployment to fall… as workers give up looking

Economists at Barclays argue that the US unemployment rate is likely to fall by 0.1-0.2 percentage points in the coming months as 370K Americans run out of unemployment benefits.

The market continue to use the unemployment rate as a key metric but a better picture of the US jobs market emerges from balancing it with the participation rate, underemployment and wages.

The minutes of last month’s FOMC meeting showed a lively debate about the real condition of the jobs market.