- BOE’s Bean: Bank has options if euro crisis worsens; can expand QE if needed; will take stock of QE decision in February
- US housing starts rise 9.3% in November; mostly multi-family starts
- EU to increase Greek fiscal monitoring staff in Athens, Brussels
- Greek FinMin: Should have moved faster on structural reforms
- Fitch: Eurozone crisis to dominate sovereign credit markets; further turmoil expected
- Fed’s Kotcherlakota more upbeat than a month or two ago on US economy
- IMF calls Irish recovery prospects fragile; cuts GDP forecast to 1% from 1.9% in 2012
- Fitch places nearly two dozen European banks on watch for downgrades
- US House rejects 2-month payroll tax extension setting up year-end rush to finalize tax policy
- IMF: Rising stress in Europe a serious risk to Portugal; structural reforms need to be implemented
- Eurogroup’s Juncker: Europe does not give the impression abroad that it is doing everything possible to save the euro
- Hedge fund walks out of Greek PSI talks
- S&P 500 rallies 3%; Milan up 2.4%
- US 10-year note yield soars 11 bp to 1.92%; Italian and Spanish yields fall
- Oil rises $3.30 to $97.35; gold up $21 to $1615
The euro rose briskly during the London session and managed to trigger stops above 1.3100 shortly after upbeat US housing data. We rallied as high as 1.3132 before slumping on the European close. A sharp downgrade in Irish growth prospects for 2012 and a warning from Fitch that more European ban downgrades are in the offing helped spoil the short-covering rally, as did selling ahead of a key zone of resistance between 1.3145 and 1.3160.
Intraday support at 1.3160 held fast and a quiet range played out for the balance of the US session. Rebounds were capped at 1.3090.
GBP was a strong performer today. After dipping as low as 1.5410 at mid-week last week, traders we’re keen to cover short positions, driving the pair as high as 1.5700 as fear overcame greed.
Sharply higher US bond yields helped USD edge up off intraday lows of 77.71. We end at 77.85.
