- Fed Ex raises profit outlook, igniting stock rally; Extreme economic sensitivity of Fed Ex to global economy cools double dip fears
- Chicago Fed National Activity index falls to -0.63 in June from +0.31 in May
- US June new home sales rise 23% off sharply downwardly revised May figures. Expiration of tax credit impacted May figure dramatically
- Dallas Fed manufacturing index falls to -21 in July from -4 in June
- Trichet: Stress test an important transparency exercise
- S&P 500 clears and closes above 200-day moving average at 1115, +1.1%
- 10-year note yields end off 3.05% intraday highs as bond buyers take advantage of lower prices/higher yields. Closes at 2.99%
The stress tests are literally yesterday’s news and traders are now focused on high-brow analysis like focusing strictly on the S&P 500 as if it were the only indicator in the world.
EUR/USD and AUD/USD traded firmer for much of the US session, absorbing central bank sales along the way. EUR/USD rallied as far as 1.3006 despite reports of Chinese selling in the 1.3080 and again toward 1.3100/05. We end the session at 1.2993.
AUD/USD was particularly impressive, over-coming its 200-day moving average as well as protection of 0.9000 barriers before reaching the 0.9035 area, It closes at 0.9030.
USD/JPY was the weak link today despite the risk-on attitude that prevailed for much of the day. Traders were glued to fixed income markets instead of equities when trading USD/JPY today. When bond yields gave up their gains, USD/JPY did as well. A bullish report from a US think tank helped spark a morning rally after early weakness but it could not hold. There is some talk that tighter Japanese margin requirements for Japanese retail forex traders will weigh on the JPY crosses this week as the new regulations come into effect from next Monday.
Cable rallied strongly but was unable to overcome critical resistance at the 1.5515/25 area. Indian central bank sales helped cool the cable rally ahead of extremely important resistance. We end the day at 1.5485 from 1.5520 highs.
Gold closes right on trendline support dating back to the dark days following the collapse of Lehman Brothers. Tighter debt spreads in Europe in the wake of the passage of the stress test are undermining the globe’s rainy day fund.
