- Italian unions call for general strike this month
- Bernanke: Growth continues to recovery at modest pace; European leaders attacking debt problems, impact on US to be modest; warns against rising debt
- US wholesales inventories rise 0.4%, sales rise 0.7% in April
- S&P: Conceivable US rating could be cut; UK rating to be decided after budget
- Buba’s Weber: I can’t understand the skepticism on euro bailout; controlled sovereign bankruptcy still should be considered
- Germany rejects Opel’s request for state aid; Merkel wants to protect workers
- World Bank’s Zoellick suggests debt restructuring still an alternative in Europe
- Portugal passes austerity package
- S&P’s Beers says Greek default, euro zone break up not inevitable
- US Beige Book: Growth in all 12 districts, most say growth modest
- S&P sheds 1.4% intraday gains, closes 0.6% lower
- US yields end near recent lows; 2-year 0.73%, 10-yr 3.18%
EUR/USD opened firm and added to gains after fears of a European-led double-dip recession faded after overnight reports that Chinese exports rose 50% last month. Stops were triggered in the 1.2010/30 region, again above 1.2050, leading to intraday highs of 1.2075.
Prices slipped lower throughout the afternoon as optimism faded amidst comments from officials (Weber and Zoellick) that bankruptcy/restructuring remain viable alternatives for states having trouble paying debts. Also weighing was a wishy-washy response from Chancellor Merkep on the Opel situation. Her government rejected state aid but she vowed to try and secure funds from the Lander to help Opel workers. Her indecision remains a major drag on German’s prestige and on the euro.
USD/JPY and EUR/JPY were sold heavily in the afternoon as US share prices reversed to the downside and bond yield fell. Stops below 91.25 were triggered taking the buck as low as 91.06. EUR/JPY was hammered by all of the above in EUR/USD as well as the US stock slide. It popped to 100.60earlier in the day on short-covering (stops were above 110.50) but it ends the day down at 109.35, a major disappointment to the momentum-types who bought the bounce, hoping for a bottom.
EUR/GBP remains weighed down amidst a return of risk aversion. Scattered talik that BP may be forced into bankruptcy did nothing to support the cross. Cable ends in the middle of its sessions range at 1.4535.
AUD/USD edged through its 61.8% fibo of the 0.8519/0.8085 decline at 0.8353 but stalled ahead of important resistance in the 0.8365/70 area. It topped at 0.8357.
