- Rumors of unrest spreading to Saudi Arabia helped fuel a spike in oil prices as high as $100 in WTI, the highest in over 2 years.
- Germany: Time has not come for a decision of Trichet replacement
- US existing home sales rise 2.7%; distressed sales rise to 37% of total
- Greek protests turn violent; policeman struck by Molotov cocktail
- Fed’s Hoenig: Fed may have to recalibrate policy so it does not overshoot and cause the next crisis
- Fed’s Plosser: Would not rule out early end of QE2
- ECB’s Weber: German growth seen at 2.5% in 2011
- BOE’s Miles: If we tighten this year, we’ll be easing next year
- Trichet: ECB fully faithful to price stability mandate
- Merkel: Don’t blame speculators for crisis; root cause was government over-spending
- US 10-year note yield rises 2.5 bp to 3.48%
- S&P 500 falls 0.6% to 1307; fell below 1300 intraday
- Oil rises $3 to $98.50; Reached $100 intraday
EUR/USD surged as high as 1.3787 during the New York morning as rumors that unrest had spread to Saudi Arabia panicked markets. Stops in the 1.3760/70 area were triggered along the way, helping fuel the move. We slipped back to end the day just above 1.3740/45 which had acted as resistance until the race to the highs.
USD/CHF fell to test all-time lows at 0.9300 this morning but bounced from that level. Technicians were itching for a break as another wave of weakness is expected on a close below 0.9300.
USD/JPY fell as the dollar weakened this morning. US yields fell as well for a time, on concerns that the spike in oil prices could derail the US recovery, if the price rise sticks. We fell to 82.32 intraday but bounced back to end at 82.50 as yields recovered some of their losses late in the day.
Cable rallied sharply in London on hopes for a BOE rate hike after a third member voted for a hike as noted in this mornings minutes of last month’s MPC meeting. Interest rate markets did not budge, however. GBP/USD retrenched and ends at 1.6205 from 1.6262 New York highs. Resistance remains strong in the 1.6280/1.6300 area.
AUD slipped to 0.9983 as copper slid on growth concerns early in the day. We recovered to close at 1.0015.
