- Case Shiller US house price index unchanged in October, down 7.3% y/y; slightly weaker than forecast
- US consumer confidence rises to 52.9 in December
- US sells $42 bln in 5-year notes at 2.665%, bid to cover ratio 2.59
- US 10-year note yields ease after auction, ends at 3.805% from 3.85%
- Russia’s Putin floats idea of capital controls to slow hot money flows
- S&P 500 little changed, down 0.1% to 1126
The US inherited the EUR/USD rate near the highs of the day around 1.4450 but prices feel modestly from there, easing to the 1.4410 area ahead of the 16:00 GMT fixing. That’s when things got interesting. The dollar went bid across the board at the fixing with EUR/USD slumping to 1.4333 within the next thirty minutes, cable collapsing from above 1.60 to 1.5870 and USD/JPY edging above 92.00.
Aside from demand for dollars from institutional investors, traders also noted talk of a US corporate shopping around a decent-sized cable order which helped set off the slide in the pound. Stops below trend lows at 1.5920 were triggered and the pound was unable to rebound above that level on a sustained basis for the rest of the session. Cable ends at 1.5900.
The buck also got a boost from reports that the BIS was buying USD/CHF shortly after the fixing. USD/CHF reached 1.0385 and ended at 1.0367. EUR/USD ends at 1.4352.
USD/JPY reached 92.07 and ends the session near its highs, ending at 92.01.
Markets are extremely illiquid, making them vulnerable to rapid price moves with little rhyme or reason. Don’t expect much improvement until next week.
