- European sovereign debt woes remain on the front-burner; Ireland pressured to take cash by EU; holding out so far
- US retail sales rise 1.5% in October; much stronger than expected
- Empire State Manufacturing survey plunges in November, to -11.1 from +15.7 in Oct
- ECB buys EUR 1.1 bln in euro zone bonds in latest week
- US business inventories rise 0.9% in September, as expected
- Philly Fed survey of forecasters: GDP +2.2% in Q4; lower than last survey
- 4 ministers quit Italian government
- ECB’s Nowotny: Other than banks, Irish economy in good shape...wants quick resolution to avoid spillover to other markets
- EU’s Juncker: No imminent bailout for Ireland; aid hasn’t been requested
- FT: ECB threatens Irish bank funding
- Moody’s: No immediate ratings impact if Bush tax cuts extended temporarily; permanent extension would be a definite negative
- US bond yields soar: 10-yr yields rise 16.5 bp to 2.95%
- Gold tumbles as dollar climbs; closes at $1360; S&P 500 falls 0.1%
European policy makers continue to try and twist the arm of the Irish government to take a bailout to keep contagion from spreading to Portugal and (shudder) Spain. The ECB apparently is reminding Ireland that without ECB bank funding their cash on hand will not last until mid-2011. The boys in Frankfurt can play rough, when they have to…Look for the ECB to take one for the team in the near future.
EUR/USD was pressured to 6-week lows at 1.3563 in late US trading with a rise in US yields contributing to strength of the greenback. Bond investors continue to jump ship despite $15 bln in buying from the Fed over the last two trading days. Strong US retail sales also suggests that the Fed could trim its QE purchases if the economy continues to improve. Technical support at 1.3560 as well as rumored 1.3550 barriers could slow the euro’s decline in Asian trade. Offers are building on bounces to 1.3620/25, traders report.
USD/JPY opened firm in the US on soaring yields but succumbed to profit-taking intraday. It dipped as low as 82.70 before rebounding back toward session highs on the swift climb in US interest rates. resistance is seen in the 83.20 area with Exporter sales layered all the way up to 83.75, traders report. Expect a grind to the topside rather than a sprint.
Commodity currencies fell during the US afternoon as rising yields took the steam out of inflation worries in the US. Gold extended its losses and ended the day on its lows at $1360. 0.9835/40 is minor support near-term while better support lies down at 0.9815.
