- Irish opposition party says budget will pass
- Handelsblatt: EU preparing Irish bailout (denied)
- ECB’s Stark: Exit strategy continues but will maintain as long as necessary
- Russian FinMin: G2o to propose global stability pact
- Nikkei: Mizuho to pay $500 mln for 2% of US’s BlackRock
- Goldman advises clients to take profit on “long China” trade
- S&P 500 falls 0.4%; bond market closed
EUR/USD fell further today amid talk of Asian central bank selling on the 1.37-handle this morning, a big shift in sentiment if it becomes more than a one-day phenomenon. Irish fiscal woes remain the market’s bone of contention with an eventual bailout seen to be the end-game. Spreads over German bunds widened to over 680 bp today despite assurance from the EU that they are ready to aid Ireland if needed.
EUR/USD tested the key support level of 1.3635 in early afternoon but showed little sign of bouncing. We will close below 1.3700 today for the first time since Oct 5.
USD/JPY firmed again in US trade and closes above the six-month old downtrend drawn from the 95.00 level. An upbeat Icimoku chart was noted as well. We end the day at 82.50.
GBP was firm most of the day as Irish woes hammer the EUR/GBP cross. We fell briefly through 0.8465 support to trigger stops before rebounding to end the day at 0.8475. Some are reluctant to buy the pound amid the Irish debt woes for fears exposed UK banks could get drawn into the spotlight. Cable ends at 1.6113.
AUD/USD slipped below parity this morning after Goldman suggested its clients book profits on “long China” trades. General risk aversion was a factor. There was talk today of heavy selling of EUR and AUD for gold to boot. 0.9960 was the low and we close at 0.9975.
