- BOE’s Posen: Clear case for more Gilt buying. If that doesn’t work, buy corporate bonds, monetize debt. Pound falls sharply before rebounding as dollar slides.
- Case Shiller index falls 0.1% month over month in July, up 3.2% y/y
- US consumer confidence tumbles to 48.5 in September from 53.2 in August
- Richmond Fed index falls to -2 in September from +11
- Business Roundtable CEO survey slides 86 in Q3 from 94.6 from Q2
- BOE’s Sentance: No need for further asset purchases
- FT: Ireland restaging a Greek tragedy?
- Gold soars as dollar tumbles: Closes at record $1308.50
- S&P 500 rises 0.5% to 1148; US 10-yr note falls 7 bp to 2.46%
EUR/USD rallied 1.3513 early in the US session but failed in its initial efforts to consolidate above the 50% retracement of the decline from 1.5150 beginning last November. We sold off to 1.3442 on profit-taking before beginning a fresh leg higher. Dovish uber-dovish comments from BOE member Posen, essentially suggesting the BOE should stop at nothing, even monetizing the debt, to restart the UK economy. That sent EUR/GBP flying and EUR/USD went with it.
Once EUR/USD broke cleanly through the 1.3510/15 area, it never looked back. We consolidated for a time between 1.3540 and 60 before making a run at the 1.3600 level, fueled by dreadful US data which whipped up expectations of further Fed quantitative ease. We topped out just short of small barriers at 1.3600, reaching 1.3595. We close only a handful of pips off the highs.
Cable took on water at a very rapid rate after Posen suggested Her Majesty’s print presses by inked up and ready to start printing 100 pound notes as fast as possible.
We fell as far as 1.5720, roughly the top of the old trading range that cable broke free of in recent days. We were able rebound to 1.582 but still have a gap on the charts from 1.5855 to 1.5825 that we have yet to fill. Solid buying from the Reserve Bank of India was noted on the way down and helped spark the quick recovery off the lows.
USD/JPY triggered stops below 84.00 after the poor consumer confidence figures and fell as low as 83.68 despite overnight talk of the BOJ doing yet another round of quantitative ease. Falling US yields were a primary catalyst as US Treasuries revisited the lowest yields on record today, closing just a few beeps above…
AUD/USD staged its own furious rally as the dollar slide extended virtually across the board. Gold broke higher as well, helping feed the dollar exodus/commodity safe-haven trade. AUD rallied to 0.9680 before finding Aussie sellers but dips were shallow in NY afternoon trade. Rumors of small 0.9700 barriers made the rounds.
USD/CAD remains range-bound as traders still sit short the greenback but fail to get much bang for their short bucks. The fear is that contagion from the slow-growing US will hold back the Canadian recovery. We close at 1.0295.
