- Weber: Hypo Real Estate cannot be allowed to become insolvent; would be many times the impact of Lehman Bros; ECB still has room for maneuver on rates
- Dutch central banker Wellink: Months of sub-zero inflation ahead but no deflation, ECB has room to cut
- SNB’s Roth: Currency sales the best method of quantitative ease and fighting deflation.
- Berlusconi, Barroso: No Eurozone bailout plan for other members, but “solidarity” if need presents itself
- Congressional Budget Office sees $1 trln deficits in each of the next 10 years
- Canadian retail sales rebound in January, +1.9%
- S&P 500 closes down 2%, 10-year notes yield rises 10 bp to 2.64%,
- Oil settles at $51.06, Gold consolidates around $953.00
It was a day of backing and filling in EUR/US in the US with choppy trade between 1.3525/1.3625 the norm with some minor range extensions on wither end of the range. Weekend profit-taking was the main theme of the day though a few stray flows helped inject plenty of volatility. A EUR/JPY fixing order helped squeeze the market after a dip to 1.3518 triggered stops in the 1.3525 region; prices jumped back to 1.36 very quickly before declining into the 1.35s for the balance of the afternoon. UBS called for the ECB to adopt QE via the commercial paper market later this year, after a 50 bp cut to 1.0% in April. New York range: 1.3518/1.3650
USD/JPY and EUR/JPY were in demand in the US with a US investment bank seen as an active afternoon buyer. Watch for a potential bearish cross in the 10 and 21 day averages to signal a top near-term. 95.20/96.25 was the New York range.
Bullish comments for EUR/CHF from SNB President Roth helped lift EUR/CHF back above 1.5300. His comments were similar to those delivered by Jordan on Thursday. They want to keep the market uncomfortable and in fear of further intervention. Roth called intervention the best way to quantitatively ease and stave off deflation. 1.5256/1.5321 The New York range
