- US durable goods orders rise 4% in July, led by autos, planes
- Gold slides to $1750 as QE3 fears/hopes subside, Down $75
- Greek 2-year yield rises to nearly 45%, up more than 7% on the day; Finnish aid in doubt
- CBO narrows US deficit forecasts; cumulative 10-year deficit now seen $3.487 trln from $6.737 trln on lower rates, budget deal
- Bank of America rallies 11% as pressure relents
- French gov’t announces tax hikes, spending cuts; cuts GDP forecast
- S&P 500 rises 1.3% to 1178
- US 10-year note yields rise 14 bp to 2.30%
US recession fears receded greatly today after US durable goods orders were reported up 4% in the month of July. The market rapidly reduced expectations that Bernanke will unveil yet another round of quantitative ease. Gold suffered the most, extending its cumulative loss of $160 in just 2 trading sessions.
US banking jitters receded today as well as Bank of America rallied 11% on short-covering and a sell-side buy recommendation.
EUR/USD rallied early in the day after ECB bond buying and on short-covering, reaching 1.4482 before slipping to 1.4389 on the European close. We spent most of the US afternoon in the 1.4420 area.
EUR/GBP was in very heavy demand, helping support EUR/USD while giving cable another richly deserved beating. Traders noted a large (GBP 1 bln) sell order executed this morning by a real money account which seemed to weigh on the market throughout the day. Cable fell as low as 1.6365 and ends at 1.6380.
The big back-up in US yields on the receding odds of a recession helped boost the dollar versus the JPY and CHF. USD/JPY rose as high as 77.08 before running into exporter offers. USD/CHF found sellers in the 0.7955/60 area. Heavy stops are rumored above the 0.8010 level, extending through 0.8050.
It was a mixed bag for commodity currencies today, underpinned by brighter US growth prospects but undermined by the heavy unwinding of long gold positions and the dwindling odds of near-term US quantitative ease.
