- EUR cedes gains, falls back to 1.2760, filling Asian opening gap
- IMF’s Belka: Weekend package not a long-term solution
- Bundesbank’s Weber: Government bond purchase plan brings with it considerable inflation risks
- Trichet: ECB ‘fiercely independent’, not pressured on bond purchase program
- Fed extends swap line to BOJ without limit
- Brown to step down as PM; Conservatives make final offer to Liberal Democrats, Lib Dems negotiating with both Tories and Labour; uncertainty weighs on GBP
- Moody’s: Likely to cut Greece and Portugal in next 4 weeks
- Gold falls $13 to $1200; Eurofirst 300 index rises 7.4%; S&P 500 up 4.4%
Despite meteoric rallies in European stocks and bonds the euro fell sharply during US trade, slipping as low as 1.2760, essentially reaching Friday’s closing level before stalling. Comments from the IMF’s Belka that the huge package assembled over the weekend was not long-term solution helped undermine confidence in the rally as did Trichet’s laughable remarks on ECB independence after doing a 180 degree turn from Thursday’s ECB meeting when he said bond purchases had not even been discussed.
1.3013/1.2759 was the NY range on EBS, with the high 10 minute after the open…
Cable lost most of the ground gained earlier in the day as hopes for a quick resolution of the UL electoral impasse faded as the day went on. Traders anticipated a deal between the Tories and LibDems being finalized today but the pound fell hard when Gordon Brown revealed that the Liberals had approached Labour to open negotiations on putting together a coalition of the losers…Cable slipped from Morning highs at 1.5052 to lows of 1.4840 in afternoon trade.
AUD/USD and NZD/USD saw steady selling in early US trade from asset managers but flows were fairly light in afternoon trade.
USD/JPY held up well in US trade after the Fed reopened an unlimited credit line with the BOJ. Rising US bond yields also helped underpin the dollar as traders moved some money out of safe-havens after the weekend rescue package in Europe. 92.88/93.54 was the US range.
