- Major round of risk aversion hits early US trading
- EUR/JPY hits a 10-year low, breaking the October low of 1.0075
- US says Strait of Hormuz closure “will not be tolerated”
- US retail sales data points to 3-5% pickups in holiday shopping
- Greece’s govt losing popularity, struggling with debt swap
- The 100-largest US public pension plans lost a combined 8.5% in Q3
- Overnight deposits at the ECB rise to €452B from €411B a day earlier.
- Gold falls $41, or 2.6%, to $1553 – the lowest since September
- Silver down 6%
- European shares fall 0.1% (UK) to 2.0% (Germany)
- S&P 500 down 1.3% to 1249; erases 2011 gain
- GBP lags, USD leads
The turkey hit the fan as US markets opened for the day, starting with GBP and EUR then spreading to the broad risk trade. There was no apparent reason for jarring moves but a number were cited 1) the ECB’s expanding balance sheet 2) the rise in overnight ECB deposits pointing to interbank stress 3) apprehension about tomorrow’s Italian debt auctions 4) rumors of sovereign downgrades 5) last day to settle FX trades before the New Year 6) funds waiting until the last minute for redemptions
EUR/USD fell to 1.2910 from 1.3070 in a flash but then pared its losses, moving essentially sideways after Europe closed. Cable fared even worse and continued to slide throughout the day, losing more than 200 pips to 1.5450.
Nothing was spared in the flight to the big buck. Even USD/JPY, which had tracked lower to 77.60 in Europe, rebounded to 78.00.
Precious metals selling was continued and relentless, driving gold and silver down near the late September spike lows.
