- US weekly jobless claims rise 15,000 to 627,000, Continuing claims rise
- US Q1 GDP revised to -5.5% from 5.7% previously
- UK’s Darling refutes BOE Governor King’s contention that he has not been consulted on regulatory reform
- KC Fed index rises to +9 in Jun from -3 in May
- Swiss, Dutch agree on bank secrecy deal
- US auctions 7-year notes at 3.30% yield; places $104 bln in notes with ease this week
- Bernanke denies pressuring BofA on Merrill deal; performs well
- White House expresses confidence in Bernanke
- Canadian PM Harper: Will be out of deficit in 2 years without need for tax hikes
- US 10-year note ends 16 bp lower at 3.54% after mini-refunding ends
- S&P 500 ends +2.1% at 920; Oil closes above $70
Tight overnight ranges in EUR/USD gave way to a downside push during the US morning with prices sliding as low as 1.3890 where it retested the spike low from yesterday afternoon. Rumors that the Reserve Bank of Australia was selling AUD/USD above 0.80 helped underpin the dollar for a time as traders took heart in buying from the idea that major central banks (when factoring in the SNB into the mix) were standing behind dollar. The rumors were downplayed fairly quickly and the buck’s rally began to lose steam.
A break above 1.3980 session highs set off a rally that reached the 1.4013 level. The rally coincided with Bernanke ending his testimony on the BOA deal with Merrill as well as well received 7-year note auction from the US, the last of the week. Stocks rallied, as did, commodities and emerging markets while bond yields dropped 15 bp. Risk is alive and well and living in New York…
AUD/USD rebounded from the RBA rumors, jumping from 0.7950 to 0.8038 on a combination of short-covering and fresh buying on renewed interest in the reflation trade. CAD was an under-performer today, relative to AUD. It trades on a 1.15 handle with traders more focused on a sluggish US recovery than a rise in commodities, at least for now.
Cable was very choppy, as usual, selling off in London on Japanese and Mid-East sales only to rebound later in the session in NY on resumption of the risk trade. Squabbling between the Chancellor and BOE is getting a tad unseemly and may eventually undermine the pound.
USD/CHF was relatively quiet in the US today with no sign of the Swiss National Bank during US trading hours.
