- US existing home sales fell 27.2% in July
- Nikkei: MOF considering unilateral intervention, BOJ additional easing to curb yen strength
- Richmond Fed index falls to 11 in August from 16 in July
- Canadian retail sales rose 0.1% in June; weaker than expected
- Belgian business sentiment (correlated with ifo) rises to -5.1 in August from -6.5 in July
- Chicago Fed’s Evans: Risk of double dip higher than six months ago but does not expect slide back into recession
- Rehn expects Greece to receive second tranche of EU/IMF funds; Greek yield spreads soar to post crisis highs at 915 bp anyway.
- Fed’s Fisher: Unclear if further Fed ease would be “pushing on a string”
- IMF/Hungary to resume talks
- US 10-year note closes at 2.495%
EUR/USD extended its slide in early US trade as the market correctly anticipated horrific US housing figures. We slipped as low as 1.2588 in early trade after breaking below the 50% retracement of the 1.1785/1.3335 rally (1.2607) and knockouts and stops at 1.2600.
We rebounded on short-covering ahead of the US data and rallied further despite the shockingly weak US housing data as the market feared the Fed would begin to employ ever more quantitative ease. With the market already heavily short, a squeeze to 1.2720 unfolded before prices ran out of steam. We end on afternoon lows at 1.2662 as risk-off correlation comes back into play.
USD/JPY slid to session lows at 83.61 after the US data, before rebounding on the news in the Nikkei that the BOJ and MOF may be ready to act to attempt to curb JPY strength. 84.45 was the rebound high. Stops lie above 84.50 near-term, traders report. USD/JPY weakened on heavy selling from US real money accounts late in the session, ending around 84.10.
Cable traded heavily in afternoon trade, slipping off rebound highs of 1.5480 to end the day at 1.5413. GBP/JPY sales seem to have been a component of the pullback as was the failure to retake the key 1.5475 technical pivot on a sustained basis.
Commodity currencies gyrated amid broad USD weakness this morning but end soft as global growth fears mount. USD/CAD ends at 1.0605, up from 1.0550, AUD at 0.8827 from 0.8873
EUR/CHF slipped to record lows at 1.3050 after UBS published a research piece saying “don’t expect the SNB to bail you out of EUR/CHF longs”…
