- Buffett disputes logic of bank tax
- NY Fed’s Dudley: Credit still tight
- Greek bond yields soar to over 300 bp over German bunds; credit default swaps 345 bp
- US PPI rises 0.2/core flat
- US December housing starts fall 4.0%; permits rise 10%
- Canada’s Flaherty: G7 to discuss currencies at Japan’s suggestion
- IMF warns Portugal could be next
- Chinese regulator denies banks asked to curb lending
- S&P 500 closes down 1%, well-above session lows.
- Gold falls $30 to close at $1111; oil down $1.40 to $77.60
EUR/USD extended its overnight losses in the US today, breaking below the 38.2% retracement of the March/November rally in EUR/USD to close at its lowest levels since August. The Fibo stood at 1.4120 and that level provided support until late morning in New York when prices finally broke lower. We fell as far as 1.4081 before bouncing very marginally. EUR/USD consolidate for the afternoon within 10-pips of 1.4100. It will close miles below the 200-day average today. Macro hedge funds were the predominant sellers today while Central banks continue to buy dips, to little effect.
GBP/USD benefitted from renewed Greek jitters today as traders use the pound as a safe-haven EUR/GBP is highly correlated with the Greek headlines and today was no exception. Spiking Greek bond yields and credit default swaps were today’s catalyst for EUR/GBP sales. Cable held up very well despite the EUR/USD slide, as a result, trading firmly around 1.6280/90 for much of the day. EUR/GBP ends near its lows, around 0.8755.
USD/JPY was a tough trade today. On the one hand it was supported by broad dollar strength but constrained by selling of JPY crosses as risk aversion rose. One spike up to 91.46 was seen at mid-morning before prices were capped by exporter offers at 91.50. Much of the afternoon was spent near 91.25.
AUD/USD was blasted today with Chinese liquidity tightening sparking long-liquidation in currencies, commodities and emerging markets today. It heads into tonight’s Chinese data on a very soft note at 0.9085.