- Market seems comfortable with stress-test methodology
- Greek debt to receive 16-17% haircut in stress tests: German sources via Reuters; critics want much larger haircuts
- German finmin to push financial transaction tax
- Canada’s Ivey PMI falls to 58.9 in June, lower than 63.5 expected.
- Fed’s Fisher: No double dip but H2 growth to be slower than H1, no need for more asset buying
- Greek pension reform passes legislative hurdle; final vote tomorrow
- S&P 500 rises 3.1% to 1060; 10-year note up 6 bp to 2.99%; CRB up 1.8%
Equities enjoyed massive rallies in Europe and the US today and the “risk” trades firmed along with them.
EUR/USD overcame early skepticism that the EU stress tests will not be tough enough and rallied to retest recent highs at 1.2665. Cable rallied to 1.5220, falling just shy of range tops at 1.5230.
USD/JPY, after trading heavy all day rallied late in the session as it became apparent that the S&P 500 would close well above resistance in the 1042 area. The exploded by 3% to end at 1060.
AUD and CAD were big gainers as the equity rally helped cool fears of a global double dip. AUD/USD triggered stops above 0.8560 and ends a cent higher at 0.8660.
USD/CAD shrugged off weak PMI data (which may hold off a BOC rate hike) and fell to 1.0470. AUD/JPY was a huge mover in thin afternoon markets as Spain and Germany captured most of the attention.
Big levels to watch overnight include 1.2665/75 (stops above 1.2685 and 1.2700) and 111.00 in EUR/JPY, a level close by at the US close.
