- US existing home sales rise 7.2% in July; biggest jump in 10-years; fourth straight monthly rise
- Fitch affirms Switzerland’s AAA rating
- Bernanke: Growth prospects in US and abroad look good; recovery to be slow at first
- Bundesbank’s Weber: Germany has never seen recovery that is not export driven; economy improving but no need to be overly optimistic: CNBC
- Obama administration raises 10-year budget deficit projection to approximately $9 trln, up from $7.1 trln.
- US 10-year note yields rise 13 bp to 3.57%; oil reaches $74.72, closes at $73.86
- S&P 500 ends at 1026, 1.9%, a new high for 2009.
EUR/USD began the day on a bid note and ended almost where it began with a good bit of volatility in between. We opened at 1.4330, rose to 1.4375 on the housing data and slipped as low as 1.4275 to shake the confidence of the bulls. Prices crawled back to end the day around where it began.
EUR/USD dropped abruptly from the 1.4375 level to 1.4275 as a pair of rumors made the rounds. The first was that China was selling into strength, something the market has become quite used to. The second was rumor was that a hedge fund covered a $3 bln short across a basket of currencies. 1.4275 support held fast and EUR/USD bounced nicely into the 1.4340s from there.
USD/JPY roared higher from the 93.80 area as US yields lurched higher as the sickest sector of the US economy, housing, showed a tremendous rebound at mid-morning. Bernanke’s comments contained no surprises but he did not rock the “risk-on” boat.
USD/JPY reached 94.70 after absorbing Exporter offers at the 94.50 level. More exporter selling is expected toward 95.00.
Cable must have seen the brunt of the hedge fund selling today as the pound fell and recovered the least during the afternoon. Stops above recent range tops near 1.6610 were triggered, yielding 1.6622. Prices soon plummeted, sliding back to 1.6465. We end the day around 1.6500.
AUD came close to the 0.8400 level after the strong US data and ended the day at 0.8350. USD/CAD was undermined by the spike toward $75 in oil, falling back through 1.08 (lows of 1.0765 recorded. 1.0818 was the closing quote.