- SNB’s Jordan very worried about CHF rise
- Rumours rife that SNB on bid again in EUR/CHF at 1.2360
- Fed’s Bullard: US economy weaker than expected in first half of 2011 but if economy strengthens in second half, Fed will likely tighten
- Regional bourses mainly flat but Sydney and Shanghai -0.6%
- Gold $1517/oz, Oil +0.5% at $98.25/bbl
EUR/USD closed in NY at 1.4035 and most volatility was caused by movements in the CHF. Rumours that the SNB were back on the bid in EUR/CHF, combined with the comments from the SNB, helped fuel EUR/CHF buying and also trigger heavy trailing stops in USD/CHF above .8850.
The USD/CHF move came first and, as liquidity in Asia is relatively poor in this pair, many dealers were forced to execute through the components, buying EUR/CHF and selling EUR/USD. This drove EUR/USD to session lows at 1.4000 but bids were very solid near the session lows. USD/CHF traded to .8892 and EUR/CHF to 1.2467 before steadying. EUR/USD has moved higher steadily since but NY session highs near 1.4070 are still capping. Ranges: EUR/USD 1.4000/67; EUR/CHF 1.2400/67; USD/CHF .8830/92
Cable also saw a stop-loss run in early trade as dealers targeted stops below 1.6075. Once done, cable recovered back to opening levels. Ranges: Cable 1.6059/1.6125, EUR/GBP .8708/29
AUD/USD fell to 1.0475 as dealers tried to figure out what was happening in the majors but this level also provided support during the NY session and we’ve seen a gradual short-squeeze emerge throughout the day. Ranges: 1.0475/1.0552
USD/JPY has again been quiet, only moving on cross flows in an 81.71/82.08 range.
