- Risk aversion intensifies as Fitch downgrades Greece to BBB+ from A-
- Fitch moved followed earlier Moody’s comments on risks to US, UK AAA ratings; more UK banking concerns following sharp slide in Dubai shares, news that China will restrain credit growth in 2010
- BOC leaves rates unchanged; reiterates to leave rates unchanged until end of Q2 2010
- EU’s Juncker: Greece will not go bust
- Swedish FinMin: We have a no bailout clause in Europe
- ECB’s Stark: Crisis not over; will see continued upsets in months ahead; signs of recovery in economy and stabilization in markets
- Obama outlines steps to cut jobless rate
- Gold tumbles as low at $1126 late in US session; oil, down $1.33 to $72.60; S&P 500 down 1% to 1092
EUR/USD worked lower throughout the US session with the Greek credit downgrade the latest catalyst to force an unwinding of the carry/reflation/commodity trade. Selling accelerated with the loss of 1.4780 early in the day and did not relent until late in the US session when EUR/USD edged as low as 1.4681. An area of technical support lies from 1.4680 down to 1.4625. Stops are seen from leveraged-accounts in the 1.4670/80 area, traders report. Rebounds have been very modest with the EUR having trouble overcoming the 1.4705 level despite reports of Chinese demand below 1.4700.
GBP/USD was amazingly resilient today as support in the 1.6250/60 region withstood a heavy onslaught. Chinese demand was again rumored on weakness. Very large stops are rumored in the 1.6230/40 region with many touting a quick slide to 1.57/1.58 in the coming days if support gives out. Perhaps tomorrow’s pre-budget report will provide a catalyst to push GBP out the bottom of its range or off the bottom. Dealers fear a windfall tax on bank bonuses.
USD/JPY was pressed lower by huge selling of EUR/JPY during the US morning. Traders blame risk aversion for the sales. Japanese retail were rumored heavy JPY buyers today. EUR/JPY tested 129.75 support before bouncing modestly late.
Commodity currencies were sold off today, as one would expect. AUD trades as low as 0.9022/25 while USD/CAD reached 1.0670 before stalling. Emerging market currencies slipped as well on profit-taking/risk-aversion.
