- US pending home sales unexpectedly rise 6.3% in December. Market had expected no change.
- Fed extends currency swap lines to central banks through October.
- US auto sales continue their slide. Ford sales down 44.3%, Toyota, 31.7%
- ECB reserves decreased by EUR 38.1 billion to EUR 315 billion on account of customer and portfolio transactions and US dollar liquidity-providing operations.
- Darling: BOE policy targets inflation, not exchange rates.
- Geithner interviewed by WSJ: to do everything possible to avoid Japanese-style quagmire
EUR/USD got a boost from technical buying, signs in the ECB reserve data that the ECB may have purchased euros as rumored last week, and upbeat US home sales data. It rallied as high as 1.3034 after buying accelerated upon breaking 1.2915 resistance. Profit-taking set in during quiet afternoon hours before a late rally lifted prices from the 1.2940s to 1.3056 after Geithner pledged aggressive fiscal stimulus and Dashle dropped out as health secretary, lifting health care stocks.
USD/JPY sold off sharply, to 88.59 after the buck did not get the same boost after US housing data that EUR/USD got. Prices rebounded after stops below 88.85/90 were triggered, up to 89.35. Most of the afternoon was spent between 89.00 and 89.35.
Cable rallied to 1.4483 as risk aversion eased in the afternoon. Chancellor Darling stuck to the UK’s stance that it targets inflation and not the exchange rate amid European concerns over the weak pound.