- Large option level at 1.2400 in EUR/CHF gets breached, triggering stop-loss selling just below
- Talk of continual M&A demand for the CHF as well as demand related to Eastern European CHF-denominated loans and mortgages which are being settled
- Fighting in Karachi between Pakistani military and militants fuels safe-haven buying of USD and CHF
- Oil price falls 1%, USD makes gains across the board
- S&P downgrades outlook for Italy
- Spain’s ruling Socialist party lose heavily in weekend local elections
- China May HSBC PMI falls to 51.1 from 51.8
- UK pay deals inch higher
- Regional stockmarkets fall by 1.5% on average
- Gold steady at $1510/oz, Silver also steady at $35.10/oz
EUR sentiment was hit hard on Friday by more talk of Greece-related tensions. The Spanish elections and the Italian downgrade over the weekend saw EUR/USD open lower in early Australasian trade. We traded a 1.4110/40 range before Tokyo opened and when the EUR/CHF barrier was breached, EUR broke lower across the board. The USD was also in demand against Asian currencies and this exacerbated the EUR/USD fall. Ranges: EUR/USD 1.4066/1.4143, EUR/CHF 1.2349/1.2425
The AUD also suffered as falling sharemarkets encouraged risk aversion and USD buying emerged across the board. The AUD was also affected by the HSBC PMI which showed growth in Chinese manufacturing at a 10-month low. Light corporate bids at 1.0610 stalled the fall for some time this morning but eventually gave way. Ranges: 1.0565/1.0649
USD/JPY has managed to rally slightly today as the positive USD sentiment slightly outweighed the general risk-aversion sentiment. For a change, the JPY played second fiddle to the CHF. Ranges: USD/JPY 81.54/82.01, EUR/JPY 115.06/60
USD/CHF finishes the session pretty much unchanged after at times hectic trading in the crosses. Range: USD/CHF .8755/97.
The GBP has held up pretty well with cable falling 10 pips on the session and EUR/GBP falling 30. Ranges: 1.6193/1.6233, EUR/GBP .8684/.8717
