- US shares sharply lower amid continued global banking woes; S&P skids 4.5%, Eastern Europe a particular focus
- Empire State Manufacturing index at a record low at -34.65 versus expectations of -24.00
- TIC inflows rose to $74 bln in December versus $61.3 bln in November
- NAHB sentiment index rises to 9 in February from 8 In January
- Fed’s Bullard: Good time to set inflation target; warns of deflation risks
- BOE’s Besley: More to be done on monetary and fiscal policy
- Obama signs stimulus pact; mortgage plan tomorrow
- US rates drop sharply; 10 year note yields down to 2.64%, down 18 bp
EUR/USD fell close to important support at 1.2448 in US trade, bottoming at 1.2564. Risk aversion was the prevailing theme throughout the session with bank stocks once again under intense pressure. Concerns that Eastern European weakness could spread to Western European banks and beyond set the tone today.
USD/JPY held firm, breaking its recent pattern of falling along with stocks. EUR/JPY rose on short-covering during the US afternoon as shorts concluded that if EUR/JPY wasn’t going down amid four percent declines on Wall Street, it probably isn’t going down in the next few days.
Same story for the pound; European banks were in the limelight today, taking the baton from the UK banks. Risk aversion remains high but the pound stood its ground nonetheless.
Commodity currencies were heavily sold today as the CRB index fell to 6.5 year lows. USD/CAD closes above 1.2540/50, now an important support area. AUD/USD tested 0.6350 before ending near 0.6375. Gold bucked the trend as the “store of value”, ending around $970.
EUR/USD range 1.2564/1.2638, EUR/JPY 115.61/116.94, USD/JPY 91.75/92.70
