Stocks continue to recover from yesterday’s rout (up 0.75%) while US bonds give back all their gains, and then some, up 5 bp in yield to 1.67%. EUR/USD is at 1.2568. AUD at 1.0071 and USD/CAD at 1.0246.
AUD/USD and CAD are outperforming at the moment while EUR/USD takes a breather.
All things considered, not a very impressive week for EUR/USD. The Greek election played out as the market would have preferred, Spanish debt has rallied strongly and the US economy looked to have joined the global slowdown in earnest.
Look to the familiar 1.2520 and 1.290 parameters early in the new week to set the tone. Above 1.2590, we could have some short-covering ahead of the EU summit. Below 1.250, we may test the downside ahead of the summit in order pressure the EU into taking dramatic action toward fiscal union rather than the piecemeal approach it has taken until now.
