• Dutch Finance Minister Bos: Double dip possible; will extend stimulus if growth below 0.5%
  • EU’s Juncker: Need to consolidate recovery before ending stimulus
  • Obama: China tariffs not meant to be provocative or protective
  • UK Treasury Secretary: Banks should write ‘living wills”
  • Fed’s Lacker: Government’s proposed resolution authority lacks credibility
  • Yellen: US recovery to be tepid; disinflation bigger risk than inflation; fears that that Fed will monetize debt are growing and are disruptive; Fed will remain fiercely independent from politics
  • S&P 500 closes at highs of the day and from the March lows at 1049, up 0.6% today
  • 10-year treasuries rise in yield to 3.42% , up 7 bp

The US session began with a bout of risk aversion in response to the brewing Chinese/US trade spat. US equities fell and the dollar, ironically rose as a result. Traders latched onto the trade dispute at mid-morning and ramped EUR/USD from the 1.4550 s up through 1.4650, where a barrier was triggered. Dips were limited to the 1.4600 level on dips during the US afternoon. Prices pushed higher late in the session after comments from Janet Yellen, suggesting market fears that the Fed may monetize the US debt are growing and they are disruptive. The 1.4615 level is eyed today, the 61.8% retracement of the 1.6040/1.2325 decline.

USD/JPY rebounded in US trade today amid growing confidence that any JPY rebound will not take out the 87.10 lows from the turn of the year. Jawboning from the Ministry of Finance may have helped bolster that point of view. A strong rebound in US yields helped underpin the greenback as well. USD/JPY tested resistance in the 91.10/15 area before consolidating. Stops are spotted at 91.20 while exporter offers are seen from the 91.50 level.

GBP was weak today with strong demand for EUR/GBP seen throughout the US session. Rates flirted with resistance that begins at 0.8827. Barriers at 0.8850 are rumored.