- US jobless claims unchanged at 505,000
- Philly Fed survey rises to 16.7 in November from 11.5 in October
- Saudi Arabian central banker: Dollar has problems but rest of the world not in much better shape; SDR not a reserve currency
- World Bank’s Zoellick: Don’t rely on US consumer to pull world out of recession; warns of asset bubbles
- Leading economic Indicators rise 0.3%, seventh monthly rise in a row
- Mortgage delinquencies reach new record; at least 14.4% of US mortgages are delinquent or in foreclosure
- IMF: Dollar to remain reserve currency for years or decades; no serious SDR study
- Senators Schumer and Graham ask for study of currency manipulation by China
- ECB’s Bini-Smaghi warns markets getting ahead of fundamentals
The markets were in a risk averse posture in early US trade. EUR/USD fell below 1.4850, USD/JPY below 88.70 and EUR/JPY below 132.00. There was no down-side follow through and the markets recovered into midday. One factor prompting traders to return to dollar-dumping was news that Senators Schumer and Graham are reviving their campaign to label China a currency manipulator. The market immediately pushed EUR/USD back above 1.49 on that report, fully aware that China could plunge the dollar into turmoil on a whim. The rebound reached the 1.4920/25 area before stalling.
USD/JPY was nasty business today, falling below the 88.70 level that had been an important support, but failing to follow-through to the downside. It has managed a squeeze up to 89.08 thus far this afternoon.
AUD traded similarly to EUR/USD, weakened with risk aversion at its heights in the morning and recovering in the afternoon as fears ebbed and markets recouped some of their early losses.
Cable fell as low as 1.6608 before rebounding to end at 1.6657.
