- French FinMin Lagarde: Solidarity to defend euro intact
- Philly Fed survey rises to 21.4 in May from 20.2 in April; slightly weaker than expected
- Fed’s Tarullo: Europe’s problems could derail US recovery, Swap line not a bailout for Europe, Greece. No Fed money going to Greece
- SNB’s Jordan: Countering excessive franc rise
- SNB’s Danithe: Theoretically, no limit to SNB’s intervention
- Sarkozy and Merkel to work together to head EU, G20 summits
- US financial regulation bill passes Senate hurdle
- Spain cuts 2011 GDP forecast to 1.3% from 1.8%
- European stocks fall 2.3%; S&P 500 closes 3.9% lower
Wild is the only word to describe markets today. De-risking is the new buzzword as leveraged accounts try and squeeze out of crowded trades all at once.
EUR/USD was mixed during the US morning, supported by massive buying of euros against a host of “riskier” currencies like AUD, CAD, ZAR, BRL,NOK and SEK.
Position unwinding lent a bid to EUR/USD despite heavy falls in US equity markets that typically would have sent EUR/USD spiraling lower. When EUR/USD did not move lower as expected, it bounced like a beach-ball held underwater. Once prices moved through 1.2450, it was off to the races. EUR/USD reached 1.2598 before stalling.
Like in the banking crisis of 2008, value at risk became an issue today. Because of a rise in market volatility, some firms were forced to cut back on positions across the board, even if they were profitable, helping explain a good bit of the EUR/USD recovery.
AUD/USD was bludgeoned today as a result of the further unwinding of risk, It fell as low as 0.8150 during the NY morning and bounces were limited to the 0.8350 level before downside pressure returned.
USD/JPY fell as low as 88.95 intraday with selling seen versus the USD, AUD and a host of high-yielding emerging markets currencies. Volatility was sky high as USD/JPY bounced as far as 90.35 before slipping to 89.65 late. Traders are on the look-out for semi-official buyers to provide the market with some support.
EUR/GBP rallied with the EUR/USD and most of the other crosses today, helping keep cable relatively well-offered. It traded 1.4235/1.4460 and ended the day at 1.4350.
EUR/CHF jumped with EUR/USD amid talk of further SNB action. It reached 1.4457 and ends at 1.4375.
