• FOMC minutes: Exit strategy discussed but no need to tighten soon
  • German tax revenues rise 9% in first 4 months of 2011: Sueddeutsche Zeitung
  • Greek Finance minister: No magic restructuring scenario will end Greek debt crisis
  • Trichet: Big emerging economies should let currencies appreciate
  • Swedish PM: Gordon Brown bad choice for IMF head; no fiscal credibility
  • Fed’s Bullard: European debt crisis biggest risk to US outlook
  • Gold rises $4 intraday as Canadian wildfires disrupt oil sands production; Closes up $2.73 at $99.64
  • S&P 500 rises 0.9%, CRB index up 2.3%
  • US 10-year note yield rises 7 bp to 3.185% on corporate supply

As is so often the case, sovereign debt jitters hit EUR/USD early in the session, taking the pair to 1.4195 at mid-morning in New York. A sharp rise in oil prices once the weekly inventory data was out of the way helped spark a “risk on” rally in EUR/USD which ultimately saw the pair challenge session highs around 1.4285 (10-day average near there) shortly after the FOMC minutes. Failure to trigger the stops above session highs and talk of the US selling gold reserves to extend the debt limit prompted a washout to the 1.4112 level before prices stabilized. We close at 1.4240, about where we left it on Tuesday…

USD/JPY got a big boost from the turn to the topside in US yields, The 7 bp jump at the long-end prompted stale shorts to cover and pushed prices close to recent 81.77 highs. We end at 81.72.

USD/CHF held overnight lows at 0.8785 and edged higher on the higher rates referenced above, ending at 0.8815.

AUD/USD was a laggard today despite the strong commodities rally today. The Moody’s downgrade of the Aussie banks was dismissed by most today as years behind the times. The pair showed some late strength, ending at 1.0625 with JPY weakness contributing to the late recovery…

Cable slumped through its 100-day moving average in early NY trade and tripped stops down to 1.6108. It later rebounded on buying from sovereign accounts and “bargain shoppers”, according to UK bankers. Cable closes at 1.6165.