- German FinMin: No alternative to Greek aid , can’t throw Greece out of euro zone, Greek collapse would lead investors to question euro
- S&P does not see nervous markets affecting Irish ratings
- Moody’s leaves Greece on review for downgrade; could be cut to junk
- US weekly jobless claims fall 11,000 to 448,000
- US sells $32 bln 7-year notes at 3.21%, bid to cover 2.82
- S&P 500 rises 1.3% , oil up 2.5%m gold slips marginally to $1166
Optimism over German buy-in for the need to come quickly to the aid of Greece boosted EUR/USD in early US trade, taking prices into the 1.3270s early in US trade. Heavy selling by “smart” spec accounts ( a big Swiss private bank and a US investment bank) capped gains early and helped set the stage for a day of range trading.
Risk aversion receded as the day wore on but skepticism that funding Greece will stop the sovereign debt crisis in its tracks kept the euro from benefiting further.
Also overhanging the market was a large sell order executed by a Belgian bank which knocked EUR/USD all the way down from 1.3270 to 1.3210. The order was for a rumored EUR 2.5 bln. Once executed,EUR/USD drifted back up in its range but comments from rating agencies suggesting further cuts in sovereign credit ratings helped keep the euro fro rallying materially. We end the day at 1.3230.
USD/JPY traded in tight 93.85/93.30 ranges, boosted to session highs at 93.30 as EUR/USD slid. Exporter offers at 93.30 capped gains and kept the greenback bottled up. Same story ahead of 125.00 in EUR/JPY.
GBP/USD was the star of the day, breaking above 1.5280 resistance near midday after several rounds of heavy buying by an Asian regional central bank earlier in the day. Stops drove the pair through 1.5300 and cable ultimately reached 1.5342 before stalling. Hopes for a Tory outright majority, thus avoiding a hing parliament are helping the pound. After listening to the leaders debate, UK voters should hope for hung PM candidates. What a dreary crew…
Commodity currencies benefited the easing of risk aversion. USD/CAD closes at 1.0045, and AUD at 0.9275.
