- ECB extends unlimited liquidity provision to troubled banks; makes no mention of intensified bond-buying at ECB press conference
- ECB buys Portuguese and Irish bonds heavily during European afternoon
- IMF’s Strauss-Kahn: Some European states “not far from the edge of a cliff”
- ECB’s Weber: Convinced Irish deal will lead to turnaround
- US weekly jobless claims rise 26,000 to 436,000
- Fed’s Bullard: QE rewards outweigh risks; European crisis having less impact than earlier this year
- US equities rise 1.3%; with half-percent of 2010 highs
- US 10-year notes rise 4 bp in yield to 3.00%; highest since mid-July
- Oil near 2010 highs; Gold fails at $1400
The market expected two things of the ECB today: a promise to extend its non-standard measures by offering unlimited liquidity to banks and a renewed vow to buy European bonds to keep their yields from exploding. Trichet gave the market all of what it expect regarding liquidity but offered nothing new on the bond purchase program.
EUR/USD slumped from around 1.3175 at the beginning of the press conference to a low of 1.3060 as Trichet wrapped up his introductory remarks and first few questions from reporters, who immediately grilled him on bond-buying.
Soon after we hit session lows, we picked up reports that the ECB was buying bonds heavily in the market. EUR/USD was about 1.3085 around that time.
We were soon off to the races. After working through offers at 1.3185/00, we pushed as high as 1.3248 before stalling. We spent the balance of the session backing and filling with 1.3185/90 now providing support on dips. Resistance now lies in the 1.3275/1.3325 window.
Jean-Claude Trichet… His lips said no-no on bond buying but his trading desk said “mine!”…
A midday dip in US bond yields sent USD/JPY skidding as low as the 83.50 level before we edged back up to the 83.90 level late in the day. Resistance remains intact toward 84.40 near-term.
AUD/USD rallied on easing risk aversion and strong commodity markets but stalled at 0.9780, the neckline of the head and shoulders pattern triggered late last week. it stalled there and closes at 0.9755.
USD/CAD fell in North American trade, boosted by big rally in oil in recent days and relative outperformance on the CAD crosses. We end the day at 1.0035.
Cable recouped some lost ground today as the dollar sipped but it way underperformed the euro as European sovereign debt jitters eased after the ECB bond buying spree. It closes at 1.5600/05.
