- ECB holds rates steady at 1%; rates appropriate
- Trichet: “Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability”. EUR rallies as he stopped short of using the code-word “brutal” to signal dissatisfaction with excessive EUR strength.
- US weekly jobless claims fall to 521,000 in latest week; better than expected, lowest since January 2009
- US wholesale inventories continue to fall, down 1.3%; twelfth monthly drop in a row
- Fed’s Fisher: Dollar will be fine; we don’t watch it day to day; FX market manic-depressive
- Fed’s Lacker: Don’t need to raise rates yet; double dip odds falling;
- Roubini: Commercial real estate next shoe to drop; U-shaped recover likely in US
- US chain store sales show signs of life in September
- US 30-year bond auction less-robust than shorter maturities; yields rise
- S&P 500 rises 0.75% to 1065.50
- US 10-year note yield rises 8 bp from session lows to 3.25%
- Gold reaches new intraday high at $1061; oil rallies $1.80 to $71.38
The dollar extended its slide today as firm US economic data (claims, retail sales) , an ineffective protest from ECB President Trichet on EUR strength, and a laissez-fair attitude from The Fed’s Fisher helped fuel a break below the closely watched 79.00/05 support level in midday trade.
EUR/USD rallied as high as 1.4817, USD/JPY fell to 88.16 and the dollar index slumped to 75.91.
Rising US bond yields after a worse-than-expected US 30 year bond auction helped bail out the dollar as did the inability of the EUR/USD to overcome key 1.4840/65 resistance and USD/JPY’s failure to challenge the 88.01 lows put in place on Wednesday. DXY techs are muddled as prices rebounded to close above 76.05.
cable was a winner today, boosted by no new QE from the Bank of England, the weak dollar and profit-taking in EUR/GBP as the ECB refrained from signalling it was close to launching any exit strategy. It rebounded toward hugely important resistance at 1.6220/30 before stalling. it closes at 1.6072.
Commodity currencies were the leaders once again with AUD and CAD reaching new highs for the trend. AUD stalled at 90.90 and USD/CAD slipped to 1.0506. 1.0500 barriers are rumored in CAD and at 0.9100 in AUD. Heavy bids are seen in USD/CAD around the 1.0485 level, traders report.
Plenty of USD-buying intervention was seen today with Singapore rumored buying USD/SGD in the US afternoon. Expect bids from central banks on dips, converting some of those intervention proceeds into EUR.
