- Saudi Arabia says to unilaterally increase crude production by 1.2 mln bbl/day
- S&P: France needs additional reform by 2020 or will lose AAA rating
- US import prices rise 0.2%
- ECB’s Stark: Very high probability of July rate hike; Risks to leaving rates too low for too long
- Fed’s Dudley: Economy to rebound from soft patch in H2; Inflation expectations rose this spring but have receded
- NIESR: UK GDP won’t recoup pre-crisis peaks until 2013; GDP grew 0.4% in three months to May
- Fed proposes annual stress tests for large banks
- ECB’s Constancio: Up to governments to solve Greek crisis
- Greek PM: Difficult talks ahead at the EU level
- US posts $57.6 bln deficit in May versus $136 bln a year ago; TARP recalculation cut deficit by $45 bln
- CNBC: Bank capital surcharge seen 2.0-2.5% of capital, not 3.0-7.0% as proposed by Fed’s Tarullo
- S&P 500 falls 1.4%
- US 10 year note yield falls 3 bp to 2.97%
- Gold falls $13 to $1530; oil falls $3.00 to $98.95
The ECB and German finance ministry remain locked in a bitter feud over a soft restructuring for Greece and with time running out before a Greek default may become necessary the market is understandably nervous. Greek CDS closed at record highs today while PIG bond yields continue to spike as well.
EUR/USD slid from 1.4488 highs early in the session to test the 50% retracement of the recent 1.3970/1.4795 rally at 1.4323 at mid-afternoon in NY. Heavy long-liquidation was the order of the day. More is seen if support at 1.4323 is lost.
EUR crosses were hammered along with EUR/USD. EUR/JPY dipped briefly below 115.00, EUR/CHF traded back on the 1.20 handle and came close to testing record lows set on June 1 at 1.2053. 1.2059 was today’s low. 1.2050 and 1.2000 barriers are rumored. EUR/GBP slumped as low as 0.8826.
USD/JPY rallied modestly today but was restrained by EUR/JPY sales. We end at 80.33. Offers remain rumored at 80.50.
AUD/USD fell as low as 1.0530 on risk aversion and soft metals and ends at 1.0545.
