• US weekly jobless claims rise 32,000 to 637,000; continuing claims rise to 6.56 mln
  • US PPI rises to 0.3% in April; ex-food and energy up 0.1%
  • PBOC: Economy performing better than expected thanks to government measures to counter the global economic crisis
  • SNB’s Jordan: Do not want CHF to strengthen versus EUR, buying Swiss covered bonds
  • ECB’s Gonzalez-Paramao- No talk of further bond buys beyond EUR 60 bln; growth weak through 2010
  • ECB economist Stark: Action so far not QE; not recommending more stimulus; could be budget crisis if stability pact ignored.
  • Obama: Must trim deficit; can’t just keep borrowing from China
  • Nikkei: BOJ to raise economic outlook slightly
  • S&P 500 rises 1% despite poor jobless claim to 893

Turn around Thursday?

US markets sold off in the wake of poor US weekly jobless claims data and the risk trades followed suit but for a very abbreviated time. EUR/US held support at 1.3525/30 and the S&P held support at 877 sending stocks and the most followed currency pair higher. Massive buying in Aussie dollar from a convoy of US custody banks ( in excess of 2 yards rumored) saw that currency rise a cent in morning trade, from 0.7475 to 0.7570 before a pause. Prices eventually rallied to 0.7619 intraday.

All the risk trades rebounded during the US session as equities bounced a percent, ending a 3 day slide. The fact that the news came despite bad news on the employment front helped lift traders risk appetites. EUR/USD triggered stops above 1.3625 and again above 1.3656, reaching 1.3663 before stalling.

Cable saw strong demand from Asian central banks, helping catch the market short and sending the rate up nearly 2 cents on the day. Many went short below 1.5090 as a head and shoulders top on the hourly chart implied a decent pullback was in the offing but those sellers were soon forced to scramble for cover.

USD/JPY overcame Japanese sell orders in the 95.80 area but was only able to marginally extend its rally to 95.86. Protection of 95.00 barriers is expected to limit dips near-term.