- US weekly jobless claims rise 554,000 from 524,000; continuing claims fall
- IMF: Yuan substantially undervalued, can’t say how much (literally)
- US existing homes sales rose 3.6% in June, third straight monthly rise; Housing led US into recession, hopes stabilization will allow it to emerge
- Belgian business confidence index rises to -22.8 in July from -23.6 in June
- BOE’s Sentance: May pause bond purchases
- Bank of Canada’s Carney:Recession over
- US Majority leader Reid: Health care bill to wait until fall
- Fed’s Fisher:Fed may or may not complete announced purchases of mortgage bonds, Treasuries
- US to tell China US consumer will not lead economy from recession
- Goldman forecasts US nonfarm payrolls to fall 300,000 in July compared to 463,000 in June
- S&P 500 rises 2.3%; US 10-year note yields rise 13 bp to 3.67%; oil rises to 66.75, up 2.0%
An astounding turnaround in the EUR/USD today. It rallied along with all aspects of the reflation trade through midday in New York, topping out at 1.4291, just shy of barrier options at 1.4300. Prices began to lose ground shortly thereafter despite no back-0ff in oil, stocks or bond yields. Traders bought dips and the EUR kept right on dipping. We fell to within a pip or two of session lows by mid-afternoon at 1.4190 and finally broke sharply lower just after cash markets closed on Wall Street. Late reports of Asian central bank bids in the 1.4110/20 area made the rounds.
Improved US economic data looks to be filtering through to dollar strength, at least for today. Fisher’s comments that the Fed may not need to buy all the bonds it has already announced is perhaps the brightest piece of information for the market today. Remember how badly the dollar was hit on the announcement that the Fed would “print money”? (1.29 to 1.47)
We seem to be recovering on the notion that they may print less than feared.
USD/JPY was extremely strong for much of the US session, rising to 95.30 where Chinese offers were spotted. It came under some modest selling pressure late in the session as EUR/USD collapsed and dragged EUR/JPY lower in sympathy. AUD/JPY profit-taking weighed as well. USD/JPY ends at 95.00
AUD/USD traded much like EUR/USD, strengthening with the stock market and managing to make a new high for the latest bounce at 0.8222 before coming unglued in the afternoon as the dollar showed renewed strength across the board. It ends the session at 0.8110, the lows of the day. USD/CAD rebounded from 1.0840 lows after upbeat BOC comments but the bounce has been contained, only to 1.09 so far. A heavier short-covering bounce seems inevitable, especially in thin Asian markets for CAD.
Cable swung less wildly than the rest today (for a change). GBP losses were tempered by comments from the BOE’s Sentance that the MPC could pause it’s bond-buying program.
Ifo, flash PMI, UK GDP and University of Michigan sentiment are on the calendar for Friday. Good luck!
