- China currency bill passes through US Senate, Obama jobs bill rejected
- Slovakia rejects EFSF reform
- Australian consumer confidence rises slightly
- Japanese machine orders rebound
- Asian stockmarkets mixed, generally lower by 0.5% but HK +0.5% and Shanghai +2% after PBOC bought banking stocks
- Gold steady at $1667/oz, still being underpinned by physical buying out of Asia
It was all about the Asian currencies in early trade, with USD/Asia shooting higher and USD/CNY trading at the upper end of its daily trading band. This was brought about by some panic selling of the Yuan after the US Senate China currency bill. The PBOC sold USD/CNY through an agent bank (a big US name) and this calmed the panic but not before the AUD/USD fell by as much as 100 pips. The PBOC also helped reverse the Shanghai stockmarket, which opened 1.25% lower but is now over 2% higher, on the bank of the CB buying bank stocks.
The China story along with Slovakia EFSF vote ensured that risk sentiment remained off and this weighed on the EUR/USD through the morning. Heavy selling of EUR/JPY by Japanese corporates as well as the proximity of barriers in EUR/USD and EUR/JPY, made ‘down’ the pathway of least resistance. Sovereign buyers around 1.3590 helped stall the fall. Ranges: EUR/USD 1.3580/1.3657; EUR/JPY 104.16/76.
AUD/USD fell hard, hit by risk-aversion and the selling in Asian currencies. Trailing stops were tripped below .9900 but well reported bids starting below .9850 gave the pair its base. The PBOC actions in the FX and equity markets have helped the Aussie recover. Range: .9863/.9965
Cable 1.5541/95, USD/JPY 76.63/73 (yes, 10 pips!!), USD/CHF .9068/.9115
