- US weekly jobless claims fall 38,000 to 550,000; Continuing claims rise rise 69,000
- ECB leaves rates unchanged; calls rates appropriate; notes US strong USD policy
- Trichet: No change in mood at ECB since last meeting; outlook brighter but sure if growth will return
- White House CEA Romer: Stimulus working despite job losses
- Canadian building permits rise
- White House sees unemployment rate exceeding 10%; no further stimulus needed in near future
- S&P 500 dips 0.6%
EUR/USD was knocked into the 1.4360s by the surprise move by the Bank of England to extend its quantitative easing program by an additional GBP 50 bln. GBP/USD of course led the way, dropping initially to 1.6824 before a period of consolidation before extending losses to 1.6750 during the New York afternoon. Rebounds were limited to 1.6789. EUR eases as low as 1.4330, taking out support from earlier in the week in the 1.4355/65 area. It penetrated the old 1.4338 highs but the fall extended only to 1.4330 before a modest bounce.
USD/JPY held firm for much of the session, edging up to test 95.80 resistance but it gave ground late in the afternoon as EUR/JPY saw some selling pressure. The greenback ends at 95.42.
Commodity currencies were moderately weaker with some minor risk aversion felt in New York from the losses in Shanghai equities overnight. AUD/USD eased to 0.8367 before ending at 0.8390. USD/CAD ends at 1.0680 from 1.0680 highs.
US payrolls are seen falling 320,000 though Goldman Sachs is calling for a fall of only 250,000. That outcome would give the reflation trade yet another boost and would send the “risk” trade into the stratosphere.
