New York forex wrap-up; Mild but persistent reflation

• Goldman forecasts S&P 500 to reach 1060 by end of 2009
• IMF proposes allocation of $250 billion in SDRs
• US leading economic indicators rise 0.7% in June; third consecutive rise
• BOE’s Bean: Bank to keep rates unusually low for as short a period as possible
• US TARP inspector general says total government exposure to bailouts $23.7 bln
• Fed’s Lockhart: slow recovery ahead; open to further Treasury purchases if needed; rates will stay near zero for some time
• White House: Budget situation to be “more challenging” in explaining postponement of mid-year budget review
• Copper reaches 9-month high at $246.50; oil stalls shy of $65.00, closes at $64.30.
• S&P closes at 2009 high of 950.90

EUR/USD built on overnight gains in early US trade, sprinting up to 1.4250 to trigger knockouts after Goldman’s bullish US equity call and news that the IMF is starting to create its long-waited pool of SDRs. Mid-afternoon selling of EUR/JPY helped keep the EUR from retaking session highs despite strong stocks and commodities throughout the US afternoon. The cross dipped to 133.80 from 134.75 in Europe before ending the day at 134.10. Barriers are rumored at 135.00.

USD/JPY was dead in the water until the EUR/JPY sales, barely budging from the 94.50 level. We dipped to 94.10 and close at 94.25.

Cable was boosted by comments from Deputy Governor Bean that the BOE wants to keep rates low for as short a period as possible. We reached 1.6557 during afternoon trade.

AUD/USD ground higher and made its way as high as 0.8170. A retest of the 0.8210/60 tops is the next hurdle for the reflation trade.