- US weekly jobless claims fall to 435,000 from from 450,00 (released early due to Veterans Day holiday)
- US September trade deficit narrows to $44 bln from $46.5 in August
- US import prices rise 0.9%; less than expected
- Irish bond spread over bunds rises to record 650 bp
- Students riot in London against tuition hikes
- Irish CB head: Rate rise a crisis move, will not last; German proposal destabilizing
- US 30-year bond auction poorly received. 10 yr note yields back up to 2.78% before slipping to close at 2.65%
- Greek adviser and ex-ECB Papdemos: No reason to restructure Greek debt
- US deficit commission unveils proposals; combination of budget cuts, tax hikes and raising retirement age
- Fed to buy $105 bln in Treasuries over next month
- Trichet: Strong dlr in interest of the US, Europe and international community
- IMF: Ireland has not asked for aid
- S&P 500 reverses losses; closes at session highs, up 0.4%
- US 10-yr note yields volatile; reach 2.68% intraday, close lower on the day at 2.65%
- Oil closes at 2010 high if $88.05; Gold falls to $1385 on USD strength, ends day at $1404
It was an extremely volatile session with EUR/USD rallying in early US trade to 1.3810 to squeeze overnight shorts only to soon begin a sharp, Irish-inspired slide as European fixed income markets went into a panic once again. Irish and Portuguese debt was hammered with Irish/bund spreads rising another 45 bp on the day to 650 bp.
EUR/USD sliced through important support at 1.3735 and again at 1.3700, triggering massive stops all the way down to 1.3670. Heavy buying from that level was seen from a US investment house, presumably for one of the many sovereigns who continue to diversify reserves.
We bounced back above 1.3700 at midday and shot to the topside after a very poor US 30-year bond auction raised jitters that foreign investors will no longer fund the US debt. A reversal in risk trades to the topside further boosted the EUR, taking it as high as 1.3804 before relenting. We close about the 1.3780 level.
USD/JPY soared to 82.80 just ahead of the London fixing but it fell back during the afternoon as US bond yields gave back their earlier gains. We penetrated medium-term downtrend resistance at 82.45 but failed to close above that level. Bids are seen now to 82.00 bit trailing stops are seen in the 81.90/95 area from latecomers to the USD/JPY party.
GBP outperformed versus most currencies today as the UK inflation report led dealers to conclude that the BOE will hug the sidelines for a considerable period ahead.
JPY crosses has a major impact on the commodity currencies today with lots of buying of AUD/JPY and CAD/JPY offsetting some of the USD strength from early in the session.
