- Irish banks downgraded by S&P, bondholders may take haircuts
- Rehn welcomes Portuguese budget approval
- French jobless rate total falls 0.8% in October
- German HICP rises 1.6%; firmer than expected
- S&P 500 falls 0.75%, DXY rises 0.9% , closes above 100-day average
- US 10-yr note yield falls 0.4%
EUR/USD tested support at 1.3200 in early US trade and bounced after failing to trigger a barrier option struck at that level. The rebound rally was limited to the 1.3265 level, very briefly. We end the session right on the 61.8% retracement of the 1.2587/1.4287 rally at 1.3235.
USD/JPY absorbed offers at the 84.00 level and rallied as high as 84.18 before dipping back to 84.03 late. We close above the cloud for the first time since June.
AUD/USD consolidated heavy losses in the 0.9630 region in NY trade. Asian central banks were rumored buyers in the 0.96-teens while Aussie corporates were buyers in the 0.9630 area.
GBP/USD broke its 100-day moving average, the key support level of 1.5650 and even briefly fell below 1.5600 today before bottoming at 1.5591. We close at 1.5610.
Over the weekend, keep an eye out for details of final terms of the Irish bailout. If senior bondholders in Irish banks are forced to take haircuts, look for renewed euro weakness early next week as the assumption will be that other bond holders around the EU will be forced to take a hit as well.
