• US retail sales less robust than expected, up 0.2% in November
  • Legality of EU fiscal deal under legal scrutiny
  • BOC’s Carney: Not under any illusions that recent EU measures are sufficient
  • Bundesbank: Will fund IMF contributions if other countries do
  • Late morning rumors of Bernanke tipping QE and of Iran closing the Straits of Hormuz for military exercises prompted quick EUR/USD pip to 1.3210 before plunging
  • Merkel rejects further calls for ESM lending cap to be raised above EUR 500 bln
  • Heavy long liquidation from money managers, corporates as 1.3145 lows give way
  • Options-related sales add to further slide
  • IMF: Greek structural reforms have not gone far enough; relying too much on tax hikes
  • Fed modestly upgrades US economic outlook in FOMC statement; says economy has expanded moderately not withstanding some apparent growth slowing in global growth; no mention of QE at all
  • S&P 500 loses gains after FOMC, falls 0.9% to 1226; Milan down 0.6%
  • US 10-year note yield falls 0.5% to 1.97% after stellar 10-year note auction
  • WTI rallies $2.20 to $99.96 on Iran fears; gold slides $35 to 1632 as Fed punts on QE

Whatever sense of complacency EUR/USD longs harbored was shattered today as major technical supports tumbled like dominoes. 1.3145 was the first level to give way, the October lows, followed by 1.3045, the 61.8% retracement of the 1.1870/1.4940 rally.

The heaviest wave of selling came late in the European session, close enough to the 16:00 GMT fixing to conclude that much of that selling was of the real-money variety, as investment managers forsake Europe all together. A shockingly strong US 10-year note auction helped confirm those suspicions as investors are clearly looking for places to hide outside the euro zone and not finding too many safe-harbors. The continued slump in gold is a case in point.

Commodity currencies took a pounding today with AUD falling below its 50% Fibo and through 1.00 for a time, ending the day at 1.0015. USD/CAD rallied as high as 1.0350. Slowing Chinese and European growth combined with the stronger dollar is cutting demand for the commodity currencies from the macro-crowd who tent to like gold and all things tangentially related. Bernanke did a number on that crew today…

Even USD/JPY had some pep in its step, ending the day testing exporter offers at 78.00.

EUR crosses were routinely annihilated. EUR/CHF fell back below 1.2300 at one stage this afternoon despite all of last week’s talk of a higher peg to come from the SNB later this week. That cross closes around 1.2325.

EUR/GBP tested the 8400 area and closes at 0.8412, it’s lowest close since February. Just imagine how high GBP would be without all that QE!