- US equities build on yesterday’s gains, soar over 3% intraday; volume light though
- US CPI rises 0.7%, core up 0.2% on 20% rise in gasoline
- Empire State Manufacturing index surges to -0.55% in July from -9.41 in June, highest in a year
- US industrial production falls 0.4% in June, Capacity use 68.0, a record low
- Bank of Italy quarterly report: GDP to fall 5.2% in 2009, flat in 2010
- Geithner: Committed to strong dollar; heard no concerns on USD reserve status from Gulf states
- FOMC minutes: GDP projections upgraded slightly; unemployment seen worsening; no new QE measures discussed
- Bond yields surge with equities; 10-year note up to 3.60% from 3.47%
- Oil prices rise $2.20 to 61.75 or 3.8%; copper up 3.75%
EUR/USD absorbed significant Asian central bank selling between 1.4070 and 1.4100 during the US morning before managing to extend its rally to 1.4135 where a trendline drawn off the 1.4337 and 1.4200 tops contained price action. Reflation was the watch-word todayas all aspects of the trade moved in synchronicity. The market feels very long at present levels.
AUD/USD moved in lockstep with EUR/USD today, overcoimg important resistance at 0.8037 despite consistent sales from Asian central banks today. The rally reached 0.8055 before stalling. Resistance lies overhead at 0.8180/85.
JPY crosses rallied as one would expect in a “risk on” environment. EUR/JPY overcame Japanese exporter sales at 132.00 and extended its gains in grinding fashion throughout the afternoon to reach 133.40.
GBP/USD was an early bright spot this morning, rallying more strongly than EUR/USD initially and briefly overcame Fibo resistance at 1.6455, the 61.8% retracement of the 1.6743/1.5983 decline, but it soon stalled. It maintains a bullish backdrop on the short-term charts above the 1.6405/10 area.
