- US durable goods orders rise 1%, ex-transportation orders up 0.9%, ex-defense/ex-aircraft up 2.0%
- Norway raises rates 0.25% to 1.50%, as expected
- German preliminary CPI rises 0.1% m/m, flat y/y
- Canada FinMin Flaherty; Agree with BOC that FX intervention a limited tool
- French FinMin Lagarde in China: China and France agree would like a stronger dollar
- US new home sales unexpectedly fall 3.6% in September
- US sells $41 bln in 5-year notes at 2.388%; bid-to-cover 2.63
- Goldman reduces Q3 GDP forecast to +2.7% from +3.0% previously.
- US home-buyer tax credit to be extended until April
- ECB’s Noyer: EUR not that strong compared to AUD, CAD, JPY, CHF; Needs to weaken versus YUAN, USD
- RBNZ says to keep rates steady until H2 2010
- S&P 500 index falls 2.0% to 1042; 10-year note yield slips to 3.41%
- Oil falls 3.0% to 77.20; gold slides to $1028
Risk was very much off today as stocks, commodities and bond yields all fell and formerly weak currencies lime the dollar and pound rebounded.Traders scrambled for any exit they could find.
EUR/USD fell as low as 1.4700 from 1.4800 in early US trade as stops below 1.4750 and 1.4725 were triggered. Very strong support in the 1.4700/1.4675 area contained the dip on the first attempt to the downside.
EUR/GBP selling was intense today as the market sees no shift in ECB policy for some time to come after weak bank lending data earlier in the week. A GBP 25 bln addition to the BOE’s quantitative ease policy is now fully priced in. The rush to sell EUR/GBP created big demand for cable this afternoon and traders who sold into the rally were forced to scramble for cover. Large offers at 1.6440/50 were absorbed as prices reached 1.6466 before stalling. Prices later slid back below 1.6400 as GBP/USD cable lives up to its well-deserved reputation as the world’s least profitable currency pair.
USD/JPY was in steady demand just above 91.00 for most of the US morning as Japanese investment trust demand for dollars and JPY crosses help prices aloft. That is until AUD burst through large stop-loss sell orders below the 0.9000 level in early afternoon. A flood of AUD/JPY selling pushed USD/JPY down to 90.56 before prices stabilized.
Commodity currencies performed miserably, as did emerging market currencies. Risk is out of fashion and may have to wait until after month-end to before it recovers appreciably. AUD fell to 0.8964 lows where we leave it now; USD/CAD reached 1.0804.
