- Chinese tell G8/G5 that must explore improved reserve currency system
- US weekly jobless claims fall 52,000 to 565,000 versus consensus of 605,000; auto shutdowns impact seasonal adjustments
- Canadian housing starts rise to 140,00 annual rate in June from 130,300 in May
- Steinbrueck: Buba may need to buy corporate bonds to avoid credit crunch
- UK’s Brown: Reserve currency discussion for the long-term; too destabilizing now
- IMF’s Strauss-Kahn does not expect double-dip recession; sees growth in early 2010
- Fed’s Duke: Banks should make all possible loans
- Bank of England slows pace of Gilt purchases for the rest of July
- Kohn argues strongly to preserve Fed’s independence; systemic regulator role will not distract from monetary policy mandate
- France’s Sarkozy: Debate needed on global currencies
- US equities close just above supports at 882.50; oil falls below $60 before closing at $60.45
Wednesday’s panic gave way to Thursday’s confusion. A sort of great decoupling seems to be going on with correlations weakening and interest dwindling. Oil continued to slide during US morning trade but the dollar was unable to rally along with it.
As oil made lows at $59.25 EUR/USD barely pulled back to 1.3950. Sensing a disconnect, traders set about covering shorts and adding to longs. The rally accelerated as it broke through the 1.4010 area (where Asian central banks had been active sellers earlier in the day) and sent prices ramping higher to the 1.4072 level before stalling. It ended the session at 1.4031. 1.3947/1.4072 was the range.
Cable was aided today the BOE’s decision to refrain from adding further to its QE policy. Later in the session it also slowed the pace of its Gilt purchases over the rest of June. EUR/GBP sales were seen during a quiet US afternoon, helping keep cable bid and EUR/USD offered. It ended at 1.5355 within a 1.6193/1.6381.
Commodity currencies remain offered on the crosses while steadying versus the dollar. The mentality seems to have shifted “sell the rallies” from “buy the dips”. AUD/USD traded 0.7800/.7863 in New York.
USD/JPY licked its wounds for most of the day within sight of 93.00; the session range was 92.51/93.18.
