- Greek PM: No IMF or eurozone bailouts; no service cuts for poor, middle class, Greece will go own way in making cuts; Economic statistics were “foul play”
- Spreads between Greek and German debt widen dramatically as market doubts Greek deficit-cutting resolve
- NIESR: UK economy grew 0.3% in December quarter
- US sells $21 bln 10 year notes at 3.754%, bid-to-cover 3.00
- Fed’s Evans: Recovery continues but headwinds remain
- S&P cuts various California credit ratings
- Fed’s Beige Book: Recovery gathering pace but much economic slack remains
- US December deficit $91.9 bln, 15th straight month of deficits
- German tax collections modestly better in 2009 than forecast
- S&P 500 rises 0.8% to 1146
- Gold reverses midday slide to $1120; rebounds to $1138
- Oil falls $1.14 to $76.65; US inventories rise
It was a roller coaster ride in EUR/USD today. Heavy buying by an Asian asset manager helped send prices to 1.4580 early on but jitters spurred by comments from the Greek Prime minister undermined confidence in the euro as the European afternoon dragged on. The PM spoke for 3+ hours today but had no concrete plan for cutting the enormous deficit.
EUR/USD tumbled as low as 1.4475 with more Asian buying seen on the pullback below 1.4500. Once the Greek presser ended, EUR/USD was able to rebound a bit, rising to about 1.4520 in afternoon trade. Firm stocks and a bounce in gold prompted the bounce.
Cable was king today. Sentance’s comments downplaying more QE after the February BOE meeting and comments from Barker suggest growth will improve as 2010 wears on helped underpin the pound. EUR/GBP was sold heavily for the 16:00 GMT fixing, breaking below 0.8900 in its wake. Cable rwached the 1.6306 level before stalling.
USD/JPY was very steady in US trade, holding onto its overnight rebound. Much of the session was spent near 91.40. Hedge funds continue to tout the risk of a Japanese credit crisis.
AUD/USD followed gold, sipping to 0.9195 late in London before grinding as high as 0.9245 during the new York afternoon.
With Greece in crisis and lending in the euro zone contracting, expect the ECB to maintain a wait and see attitude at tomorrow’s monthly meeting. Market could stay thin until the tone of the press conference becomes clear.
