- US April CPI falls 0.1%; core unchanged
- Geithner: Europe can manage crisis
- Fed, ECB “check rates” in EUR/USD
- Danish central banks cuts some rates 10 bp
- Greece denies it considers leaving euro zone
- Pimco buys Treasuries, sells European bonds
- FOMC minutes: Discussed asset sales but will defer decision. Europe crisis may slow growth; high unemployment, slow spending to limit recovery. Staff sees GDP 3.2-3.7% this year.
It was an extraordinarily active session today that benefited the euro in a number of ways. Massive intervention by the Swiss National Bank was launched today in EUR/CHF which pushed the cross up as much as 300 pips intraday before they retreated to defend the 1.4220 level. Similarly massive covering of EUR/AUD shorts was seen by hedge funds today, reversing one of the “darling” trades of the leveraged crowd for many many months. Prices rose 4% intraday as funds scrambled for the exits. Also helping the euro were very credible reports that the Federal Reserve and the ECB both “checked rates” (ringing around to banks, making market inquiries..) around the 1.2300 level.
One dose of volatility was dealt by a rumor that the Greek finance minister said he was considering leaving the euro. EUR slumped to 1.2256 on the talk but prices soon rebounded, spurned by the massive cross buying.
EUR/USD reached 1.2400 in late afternoon trade. China sold into strength starting around the 1.2370 level, traders report. Huge stops are rumored now above the 1.2445/55 level with more above 1.2510.
Marco fund slaughtered the AUD today, sending it as low as 0.8355during the NY afternoon. The sold it versus USD, EUR and JPY, with some GBP thrown in as well. Sell the rallies will be the theme in AUD for the next few days, most suspect.
GBP was boosted on many of the crosses today, especially versus AUD today. It rallied as high as 1.4440 in afternoon covering. Stoploss short-covering will intensify above the 1.4510 level.
USD/JPY was weighed down by liquidation of “risk trades” but talk of USD/JPY and EUR/JPY buying from semi-official Japanese accounts limited the damage to USD/JPY and kept the focus. 90.95/92.02 was the NY range and we end at 91.58, near the middle.
