- US pending home sales leap 6.7%, biggest rise in 7 years
- ECB’s Constancio: No deflationary spiral in eurozone but inflation could be lower than expected, does not foresee accelerated dollar losses
- NAHB says US housing market at or near bottom
- UK cabinet shuffle in the works
- Auto sales better than expected though sharply down from year ago; GM calls bottom for auto market
- Russia Medvedev eyes basket of reserve currencies to supplement dollar: CNBC
- Commodities little changed; US index breaks 61.8% Fibo of July/March rally
- S&P rises marginally, up 0.2%. Banks issued more stock today
The dollar extended its across-the-board slide as the risk assumption trade concentrated on the greenback today. Hopes for a bottom in the important US housing market were raised by a jump in pending home sales while even the auto sector saw improved sales in May from April. Geithner’s defense of the dollar in Beijing did not impress the market, nor did his assurances that the Chinese are supportive of US economic policy.Momentum is trumping traditional economic analysis and risk-taking is trumping all else.
EUR/USD reach 1.4280in early NY trade, sold off to 1.4210 where a pair of Asian regional central banks bought. Prices reached 1.4330 in afternoon trade after the auto sales figures were released.
Cable continues to soar with the market absorbing news that Abu Dhabi sold its big stake in Barclays as well as persistent talk of a cabinet shuffle as Brown’s popularity plummets.
Commodity currencies continue to soar on hopes China will lead the recovery. AUD rose to 0.8230 despite a dovish RBA , CAD to 1.0792 and kiwi to 0.6595, breaking the 50% retracement of its decline which began in early 2008.
The BIS bought some USD/CHF today, helping push EUR/CHF up in the 1.50/1.5250 range that has prevailed in recent weeks.
ADP will be eyed for signs of improvement in the US labor market. It is early in the cycle for employment to rebound but if it does it will help cement the notion of a US economic recovery. Central bank meetings will dominate Thursday while non-farm payrolls are the headliner on Friday.
