- German preliminary HICP 0.0 m/m, +0.8% y/y, lower than expected
- US personal income up 0.4%, spending up 0.2%; Savings rate 4%
- ECB bond buying totals EUR 55 bln so far
- MPC’s Sentance: GBP undervalued, rates should rise
- Fed’s Lacker: Don’t drop extended period language yet
- Fed’s Warsh needs convincing on need for larger Fed balance sheet (more QE)
- Commodities fall on hedge fund liquidation as interest rates plunge; Short squeeze in bond market. Oil falls 0.90 to $77.95; Gold closes at $1238.50 from $1262
- S&P 500 falls 0.2% to 1075; 10 year note falls to lowest yield in 14 months at 3.025%
EUR/USD was undermined by heavy selling in EUR/GBP today as repatriation by a UK clearing bank got the ball rolling. The combination of lower-than-expected German inflation data prompting deflation jitters and hawkish comments from the MPC Sentance (the lone vote for higher rates at the last MPC meeting helped undermine the cross further. It fell to a session low of 0.81215 in New York afternoon trade.
EUR/USD was soft all day in New York. sliding from the start and triggering stops below 1.2295/00 and again below 1.2280; Slid support at 1.2250/60 was brushed in early afternoon but stops are building on a 1.2250 break.
USD/JPY fell early in the session on a general bout of risk aversion but a very large bid at 89.05 (rumored to have been Kampo) helped halt the decline. Prices stalled in the high 89.40s on rebounds. Small stop-loss buy orders are clustered above 89.50.
Cable was bid throughout the session (see EUR/GBP above), reaching 1.5130 in early afternoon.
Commodity currencies were a mixed bag. Aud peaked at 0.8759 late this morning but slumped to end the day at 0.8725. USD/CAD was quiet in a 1.0325/65 range.
Another day, another record low for EUR/CHF as Switzerland is suddenly cured of its deflationary ills. Miraculous. The SNB has declared victory and left the battle field holds hundreds of billions of EUR/CHF at infinitely higher levels. We end at 1.3340 from 1.3330 lows.
