- ADP employment report shows US private sector job growth of only 13,000; well below expectations
- Canadian GDP unchanged in April after 0.6% March rise
- Chicago PMI dips to 59.1 in June from 59.7 in May
- Trichet: Smooth transition in money market
- Fed’s Lockhart: Recovery not strong enough to warrant higher rates
- Moody’s: Spain on review for a downgrade from AAA. last of ratings agencies to act
- Merkel’s presidential candidate Wulff requires three votes to secure German presidency
- S&P 500 slides late, falls 1.0% to 1031; 10-yr note at 2.94%, new 14 month low
- Oil falls 0.70 to $75.25; gold ends mid-range at $1242
EUR/GBP was the star today as month-end demand, relief over the ECB refi and soggy UK data helped set off a nasty short squeeze. The rally took EUR/GBP as high as 0.8227 on the London close before reverting lower in afternoon trade, ending at 0.8180.
EUR/USD was mostly range-bound in US trade, running into selling in the 1.2290s throughout the session and ending on its lows at 1.2225. Risk aversion remains high as Merkel did not get much support in the German parliament today, casting a shadow over her political health and US growth fears return to the fore after weak ADP data set the stage for poor payrolls on Friday.
Commodity currencies were bashed throughout the session, sold both when the euro was strong early in the day and when the dollar recovered late in the session. Month-end requirements were part of the story but a stormy near-term outlook for global growth remains the primary factor at work today.
Odds of a Canadian rate hike next month were trimmed further by flat April GDP. USD/CAD rallied as high as 1.0647.
USD/JPY was in modest demand for month-end fixings early in the day but ran into heavy sales in the 88.70s. We end the day soft at 88.44 as risk aversion returns. Japanese tankan data will be a focus overnight.
The rest of the week should be busy as purchasing managers reports from around the globe and US employment data Thursday and Friday (claims and NFP) help shape sentiment.
