- Rumors Spain needs multi-hundred bln euro bailout help start stampede
- Ratings agencies reiterate Spanish ratings
- Spanish PM calls rumors “madness”
- US consulting firm says Bank of Canada to delay hike until July
- US factory orders rise 1.3% versus expectations of 0.1% decline
- US pending home sales rise 5.3% in March
- German tax revenues seen missing forecasts by EUR 50 bln in coming years
- IMF to meet on Greek package on Sunday, May 9
- S&P 500 falls 2.4%, European Stoxx 50 falls 3.8%
Pick your poison: It was a risk averse day on steroids. Greece, Spain, China growth slowing, terror in the US, ECB flip-flops, Australia’s resource tax…all and sundry played some role in sapping investor confidence and sending the dollar soaring.
EUR/USD fell as low as 1.2993 during the US afternoon as oodles of barrier options at the 1.3000 level were targeted successfully.
GBP was an early focus along with the EUR. Massive EUR/GBP buying was seen this morning, with a single 1.1 bln order noted, but the cross barely budged as the market was happy to sell the euro. Something had to give, and that something was cable. It tumbled to 1.5092 after breaking 1.5125 support and triggering a 1.5100 barrier.
EUR/GBP selling accelerated as the day wore on and stops below 0.8590 eventually were triggered, helping spark a sharp GBP/USD rebound. The cross fell as low as 0.8568.
AUD/USD was a victim of risk aversion as well of “buy-the rumor/sell the news” syndrome after the RBA hike. The statement was seen as signalizing a pause. Jitters over Chinese growth helped send AUD longs to the exits, as well. We fell as low as 0.9085 after breaking key support at 0.9135.
USD/JPY hung in there today despite risk aversion amid talk that Kampo (the Japanese Postal savings system) is buying dollars on dips. Dips were limited to the 94.30s
EUR/CHF saw massive turnover today with over 5 bln EUR in large trades seen on various platforms. How long is the Swiss National Bank’s line in the sand at 1.4325 going to hold?
Gold made a major reversal of fortune today, sprinting to a $1192 high before slumping to a low of $1167. A surging dollar is not very inflationary; nor is a euro zone economy facing massive austerity. Oil fell over 4% to $82.60.
