- ECB won’t change collateral rules for Greece: Papademos
- A Moody’s downgrade would make Greek government bonds ineligible to be used as collateral at ECB
- ECB ups estimates for bank write offs
- Iraq confirms Iranian incursion; calls it breech of sovereignty; seeks peaceful, diplomatic solution
- US equities rally 0.6%, US 10-year notes edge higher, up 6 bp to 3.54%
- Gold recovers from dip below $1100, ends at $1112; Oil rally fades, up only $0.40
EUR/USD extended its December swoon, falling as low as 1.4262 after the London afternoon fixing. Once that selling was out of the way, prices rebounded into the 1.4340 before stalling. Fundamental jitters regarding whether Greek government debt will be eligible for use as collateral at the ECB if it is downgraded by Moody’s and comments from the ECB that banking write-downs will likely be larger than earlier thought helped weigh on the single currency intraday.
USD/JPY spurted up to 90.91 as EUR/USD plunged to its lows but was unable to sustain the break of the important resistance at 90.70 for long. The firmer US bond yields were supportive overall as USD/JPY ended at 90.40 after one of the wilder sessions for that pair in sometime.
Cable was volatile today as well, falling late in the London session to a new trend low at 1.6053 as London wrapped up trading. US investors are beginning to hedge long currency exposures as evidence by the increased dollar purchases at the fixings late this week.
AUD ended near sessions highs, around 0.8910 after The spike low during the US session at 0.8840 was well above the panic low set in Sydney at 0.8809. CAD firmed up in recent ranges, ending at 1.0663, once again failing to hold above the 1.07 level.
That’s it for us. Have a great weekend all!
