• EUR/USD closes around 1.4830 for third day; 1.4750/1.4950 DNT contains price action
  • Commodities continue sharp decline; Oil falls 2% to 108.85; copper 3% to $4.12, silver falls 6% to $39.25; gold down 1.6% to $1515.
  • ADP employment report: US private sector employment rose 179,000; weaker than forecast
  • ISM non-manufacturing index falls to 52.8 in April from 57.3 in March; much weaker than expected
  • Fed’s Rosengren Dollar not causing inflation; rates appropriate
  • Fed’s Williams: Inflation transitory; to peak mid-year, decline next year
  • S&P 500 falls 0.7% to 1347
  • US 10-year not yield closes at 3.22%

EUR/USD surged after weak US data early in the day and on dovish comments from the Fed’s Rosengren. We reached 1.4940 very briefly, aided by rising German yields before reversing course. Protection of 1.4950 barriers helped contain the rally.

Very sharp selling in a number of commodities helped give the dollar a lift from early lows. The soft US data, along with fears of further tightening from China prompted concerns over future global growth. AUD/USD was a major victim, sliding as low as 1.0730 at the Wall St close.

USD/JPY dipped briefly below the 80.50 level on lower US yields and a general uptick in risk aversion crimping demand for carry trades. Fear of semi-official buying from Japanese accounts kept bears mostly at bay in USD/JPY. We end at 80.60.

Expectations early in the day were that the ECB would announce a June rate hike instead of a hike in July. That speculation cooled a bit as commodities tumbled. “Strong vigilance” is the phrase that pays for EUR bulls. If Trichet utters those words, a signal for a June hike will have been received by the markets.