New York forex wrap-up; EUR/USD extends range modestly

• Geithner: We support a strong dollar. The dollar will remain the principal reserve currency. The dollar’s role in the international financial system places special responsibilities on the United States, to sustain confidence in our financial system, to bring our fiscal deficits down when recovery is in place, and to preserve the Fed’s strong record of price stability.
• JP Morgan sees a leveling off of mortgage delinquencies in last 60-90 days
• US jobless claims fall 47,000 to 522,00; continuing claims tumble; Seasonal distortions still evident
• IMF: UK needs credible plan to ease debt burden or risks losing market confidence
• Philly Fed survey falls to -7.5 versus -2.2 in June
• US TIC data shows net outflows in May
• NAHB builder confidence rises to 17 in July from 15 in June
• Nouriel Roubini sees worst behind US economy; recession to end this year
• US equities add to gains; S&P 500 gains 0.9% to 941

EUR/USD saw very large buying late in the London morning as A US investment banked ramped it as high as 1.4153 after JP Morgan’s strong earnings report. Steady selling from China in the 1.4140/50 area helped stall the rally but dips were limited to a pip or two below 1.41. An improbably large, seasonally-distorted jobless claims report sparked a jump to 1.4165 briefly before another dip to just below 1.41. A final rally to 1.4150 was seen late in the day as Dr Doom lifted his gloom and stocks broke out of a lethargic range and taken on another 8 points. They are up nearly 6% on the week.

JPY crosses perked up late in the day after consolidating for much of the session. EUR/JPY rallied a JPY from its lows and AUD/JPY recovered late in the day as well. EUR/JPY ends at 132.60.

Cable had a quiet US session and ends around 1.6425. Hourly trendline support comes in at 1.6410. Some small trailing stops may lie below that level.

EUR/USD unable to surmount 1.4150

EUR/USD had a zippy little rally as the reflation trade sparked back into flame this afternoon but EUR/USD was unable to overcome the 1.4150 level on its latest push We’ve drifted back to the high 1.4130s on profit-taking.

Look for more 1.41/1.4150 overnight as the market awaits earnings from two of the more vulnerable banks, Citi and BofA. Goldman and JPM hit the ball out of the park last quarter. It remains to be seen if the two banks with the heaviest government involvement will be able to follow suit.

EUR/USD extending gains, life breathed back into reflation trade

EUR/USD has firmed toward 1.4150 as US equities have returned to the black, oil has turned up on the day and bond yields have stabilized. Upbeat NAHB data and Roubini’s view that the worst is behind the US economy appear to be giving the trade new life.

The 1.4165 spike high after the funky jobless claims data this morning. It should be noted that central banks were sellers near present levels earlier in the day.

JPY crosses have risen on the rebound in the reflation trade. EUR/JPY is now at 132.55, roughly a yen above session lows at 131.60 this morning.

More trivia

What former foreign exchange trader later became US Treasury secretary?

EUR/USD drifting higher in afternoon range

EUR/USD has spent the last four hours between 1.4000 and 1.4030 and we are drifting toward the top of that range in afternoon trade. Maybe the less-gloomy outlook from Nouriel Roubini is helping lift spirits.

Next trivia question: After “breaking” the Bank of England in 1992, against what central bank did Soros next score a victory (and trigger a near-global meltdown)?

Roubini: Worst is behind us…

Dr. Doom, Nouriel Roubini, says the worst is behind the US economy, according to CNBC. Maybe if the market is bored, the reflation trade will do better on the comments.

Next trivia question. What is the nickname for the Canadian $2 coin and why?

Summer time and the trading ain’t easy

Hard to make a buck when the markets are essentially flat. To fill the time, let’s play a bit of trivia.

The prize? The admiration of your fellow ForexLive readers….

Here goes: Why is GBP/USD called Cable?

Answer in the comments please.

NAHB index up to 17 in July

The National Association of Home Builders reports that its builder confidence index rose to 17 in July from 15 in June. The consensus was for a rise to 16.

Markets remain stuck in summer doldrums, consolidating the big moves from earlier in the week.

Cable losing its mojo?

Cable is consolidating in uninspired fashion in the 1.6420 area after stalling twice in the 1.6470/75 region the last two sessions. Uptrend support comes in at 1.6395 on the hourly charts while a break below overnight lows at 1.6356 can be viewed as triggering a double-top pattern. The measured move objective to the downside would be 1.6235.

On a fundamental note, the UK says it will delay major spending decisions on new nuclear submarines until next year. If this is read as spending restraint, it could be somewhat sterling positive.

No surprise, big banks see limited client flows

As we noted yesterday, much of the volume in recent days has been professional in nature with banks, central banks and hedge funds the primary players, throwing around big blocks among themselves. Given that we’ve been in a narrowing range for months, there is little need for end-users of currency markets like corporations and institutional investors to protect themselves against potential adverse moves. Only breaking free of recent ranges will bring those players back to the market to take positions that will not be liquidated 15 minutes later for a 25 pip profit…