- Case Shiller home price index falls 18.1% y/y in April; rate of decline slows
- Chicago PMI rebounds to 39.9 in June, slightly better than expected
- US consumer confidence falls to 49.3 in June from 54.8 in May
- World Bank chief Zoellick: Global financial markets have arrested their fall but crisis far from over
- Fed’s Bullard: Policy to stay very loose for a while but important to articulate exit strategy to avoid hurting inflation expectations.
- Canadian GDP -0.1% in April, declining at slower rate
- US equities close down 0.9%, oil closes at $70, down $1.50 after trading to trend highs overnight at $73.38.
The dollar fell to its lowest level of the year versus the pound at 1.6744 and EUR/USD rallied to three week high at 1.4154 before reversing course during the US morning session.Reports of very heavy selling above the 1.4100 level by a US investment bank (upwards of EUR 700 mln helped turn EUR/USD lower. After consolidating a while in the 1.4070/80 region rumors made the rounds that there were upwards of EUR 4 bln to be sold at the month-end fixing. True or not, it was “sell first and ask questions later”. EUR/USD fell as low as 1.4002 before steadying. Reports of buying from Asian regional central banks near the lows made the rounds.
Significantly, EUR/USD held above key support at the 1.3980/90 level and GBP/USD held onto 1.6425 support, though it did post a bearish outside day key reversal. The US dollar index also posted a key reversal on the charts, defined as, in the case of the dollar index (reverse it for cable) a lower low on the day followed by a higher high than the previous day and a close above the prior day’s close.
USD/CAD continued to go its own way, strengthening above 1.1600, reaching 1.1640. AUD/USD gave back overnight gains as the reflation trade was unwound a bit at month, quarter and half-year end .It ended at 0.8060 after dipping as low as 0.8040 from morning highs at 0.8155.
