New York forex wrap-up; Euro decouples from equities

• US weekly jobless claims rise 3,000 to 608,000, continuing claims fall
• BIS buys EUR/CHF just above 1.5000; rally reaches 1.5145/50
• Philly Fed survey rebounds to -2.2 in June from -22.6 in May
• Conference Board’s Leading economic indicators rise 1.2% in May from 1.1 in April
• Geithner: US consumer will not lead the world out of recession
• Irish PM: Will lose EU referendum unless assurance have force of treaty
• US tracking North Korean ship, believed to be moving weapons, nuclear materials
• BOC’s Carney: Rates on hold until mid-2010; Watching CAD, USD to retain dominant; intervention an option but rarely effective
• US yields jump 17 bp in 10-year maturity.
• Oil up 0.20 to $71.22. Gold ends at $932.50
• S&P 500 up 0.8%

EUR/USD rallied in the wake of the Philly Fed survey, reaching the 1.4000 level and triggering a barrier at that level. Follow-through was non-existent however and the single currency was unable to build on gains in other markets like equities and commodities. A downside purge came at mid-afternoon with heavy selling from macro funds noted on the pullback. Stops were triggered in the 1.3930/40 region and again below 1.3900. We fell as low as 1.3870/75 where prices steadied, helped by buying out of the Middle East. Rebounds were modest, barely above 1.3900. The Fox story on the US tracking a North Korean ship, potentially carrying nuclear materials was blamed for what we’ll call the “nuke puke”.

USD/JPY was supported by a rebound in US bond yields. 10-year notes ended the day at 3.83%, up from 3.57% yesterday afternoon. Offers are eyed from 96.70 up through the 97.00 level, traders report.

Cable remains a choppy mess. It fell hard this morning after poor retail sales but was relatively well-bid throughout the US session as EUR/GBP fell from 0.86 in London to below 0.8500 during the New York afternoon.

Commodity currencies traded strongly this morning after the upbeat US data. AUD overcame options related selling above 0.8000 early in the day to reacgh 0.8055 before ending the session on a weak note as EUR/USD sagged. It closes at 0.7996.

Carney: Intervention an option but it is rarely effective

Talk about defanging your own argument. Bank of Canada Governor Carney says intervention is a an option but that it is rarely effective. He says CAD strength partly reflects fundamentals and partly weakness on the part of the USD. The BOC believes in a floating exchange rate, he says.

USD/CAD is drifting  in the upper end of the days range, now around 1.1340. 1.1365 was the high.

EUR/USD rebounds modest

EUR/USD appears to be in no rush to rebound after being slapped lower in US afternoon trade. the inability to extend gains above 1.4000 early i the session left the market quite long intraday and with the usual catalysts like firm stocks failing to work their magic on prices longs began to head for the exits. A report via Fox News of the US tracking a North Korean ship believed to be carrying weapons and nuclear materials, selling accelerated.

We slumped as low as 1.3870/75 as stops were triggered around 1.3940 and again below 1.3900. Middle Eastern buying was seen from the lows, traders reported.

1.38/1.40 looks to contain things in the near-term with choppy trade in between.

Big Brother is watching but he’s not necessarily doing anything

Think of him as a looming presence. BOC Governor Carney says he watches CAD carefully and cares where it goes. He does not forecast its movements though, he says.

Regarding the US dollar, Carney says he sees no change in its dominance.

USD/CAD is consolidating in the 1.1325 area after falling back to 1.1234 earlier.

Fox reports US tracking North Korean ship

Fox News reports the US is tracking a North Korean ship believed to be carrying weapons and nuclear material. Risk aversion looks to be responsible for the EUR/USD dip, along with long liquidation.

Mid-East buyer swoops in on dip in EUR/USD

Dealers report heavy buying by a Middle Eastern account from the 1.3870s up through the 1.3895 level. This account is not seen often but tends to be influential when he trades.

All hail Sean Lee!

He had it right last night…Using his logic, 1.3800 should be well-supported near-term.

EUR/USD has seen the purged feared earlier and trades at session lows of 1.3875.

Here’s a switch: Carney says banks have too much capital

Around the globe, banks are trying to improve their capital ratios. In Canada, the central bank is all alone in trying to get the banks to lend more and let their capital ratios drop.

Rates will be held at their abnormally low levels through mid-2010, BOC Governor Carney repeats in a speech that just hit the wires. He did not mention the strong Loonie today, a shift after two mentions in recent weeks. Looks like the move back to the 1.14 area meets with the Governor’s approval.

USD/CAD trades now at 1.1337.

USD/JPY offers 96.70/80/97.00

Offers are scattered from the 96.70 level up through 97.00, traders report, some from Japanese exporters, who have been making their presence felt in recent sessions.

EUR/USD has come under unexpected downward pressure, slipping to the 1.3900 level thus far. The link with equities looks to have broeken down, at least for today.

EUR losing link to reflation trade

What’s this? US equities are up 1.0%, oil is up on the day, interest rates are rising and commodity currencies are firm. EUR/USD should be well supported, no?

Not so fast, Kemosabi.

EUR/USD is still trying to digest the binge it had at the 1.4000 level after the Philly Fed and is having trouble. A purge maybe needed before a rebound may ensue. Stops in the 1.3940/45 area are threathened as we write. Look for bids toward 1.3900/10 on dips.