- Japan MOF official: Will not comment on whether Japan intervened in forex market. Could intervene in market without warning
- IIF to hold new Greek creditor meeting in Rome Thursday with creditor banks and EU’s Grilli – Source
- Italian govt calls confidence vote in Senate over austerity package
- German FinMin source: Substantial private sector involvement in Greek bailout is still a must and will happen
- Moody’s downgrades govt-guaranteed debt of 5 Irish banks
- ECB’s Gonzalez-Paramo: EU governance is a weakness
- Italy bond flight flashes red warning signals – Latest from AEP at The Telegraph
- China Cabinet: To restrict house purchases in some second and third tier cities
- China CBank advisor: China should speed diversification of its fx reserves to hedge against any dollar fall
- Euro zone June inflation flat m/m, +2.7% y/y, as expected
Crazy, crazy, crazy.
USD/JPY sits at 79.00, up from around 78.70 when I sat down. Inbetween we had a horrendous spike to 79.55/60 just as European traders were taking off their coats followed by an instantaneous sell-off. Not surprisingly given the speed of the rally, rumours the BOJ had intervened soon circulated. Seems they hadn’t.
Rather the blame for the spike was put on the shoulders of a US commercial bank and to a lesser extent a large Japanese bank and a UK clearer. Talk is they combined to execute a very large corporate order, but I’m not sure we’ll ever know exactly what went on.
Suffice it to say once it became clear it wasn’t the BOJ in open market down we came and since then it’s been narrow range bound trade in the pairing. Talk of sizeable sell stops now through 78.40.
EUR/USD marginally easier at 1.4190 from around 1.4210 when I first sat down. Inbetween we’ve been up to 1.4255/60 and down to 1.4155/60 in extremelty choppy trading conditions. Early dip saw decent buying from SAMA emerge in the 1.4180/85 area and BIS joined in around 1.4190 and we were quicly back above 1.4200.
All went quiet for awhile until further reports came in of BIS buying again. We certainly had reports of them buying as high as 1.4225. Then as rumour circulated of a “strong” Italian auction result we spiked to the 1.4255/60 area.
Release of the auction results was a bit of a cock-up apparently, being a somewhat piecemeal affair. Anyways we were soon slumping lower. Whether it was a buy the rumour sell the fact price action or the market just didn’t like the very high yields paid, I’ll be buggered if I can tell ya. Spoke to four people, two thought it was a decent auction, two not.
Anyways reports soon came in BIS had been selling, certainly in the 1.4215/25 area, most probably higher although I didn’t hear such. We passed through 1.4200 and then lo and behold BIS popped up buying in 1.4175/80 area. This prompted a slight rallyette to 90/95 before a slump to 1.4155/60 as India sold decent slug. We then rallied once more. Choppy as all hell. Needed to have the deep pockets of a central bank to survive that little lot.
