• EUR/USD edges above 1.51 as risk rally extends but gains come grudgingly
  • BIS buys USD/CHF several times below 1.00
  • Canada’s Flaherty: No special measures likely to be used to curb CAD strength
  • ISM manufacturing index falls to 53.6; lower than 55.0 expected
  • US Pending home sales rise 3.7% in October; firmer than expected
  • US construction spending flat in October
  • BOE’s Posen: Expects growth next two years; inflation expectations contained; monetary policy wrong tool for asset bubbles
  • Global PMI falls to 53.6 in Nov from 54.4 in Oct: JP Morgan
  • Plosser: Dollar decline must be viewed in context of rise during crisis; must hike early to retain credibility, before jobs fully recover
  • Market News International: ECB sources not worried about EUR/USD until 1.60
  • EU’s Junker- EU agrees with IMF that EUR overvalued; Greece has until February to get budget in order
  • S. Korean reserves rise to record $270.9 bln in November, up $6.7 bln in November
  • Gold reaches $1201.70 in cash market. Closes at $1196.50

EUR/USD was lifted to fresh rebound highs at 1.5118 in New York as the risk trade resumed in full force today as the market bade goodbye to Dubai. The catalyst which allowed EUR/US to overcome 1.5100 which provided a cap for much of the US morning was a report from Market News International which quoted unnamed ECB sources as saying most ECB officials are not very concern about EUR strength until it gets toward 1.60.

Asian selling of EUR/USD on strength amid reports of of a 1.4850/1.5150 DNT expiring Friday helped cap the advance. Also weighing on EUR were steady sales of EUR/GBP which came in several waves during the session. As much as EUR 4 bln was rumored to have been sold today. Some say the flows were linked to a rights issue by a UK clearing bank. Eurogroup comments on Greece’s poor fiscal picture also helped knock EUR/USD down to 1.5085 at the close.

USD/JPY gave up much of its gains during the New York session, dipping into the 86.50 region before steadying. The BOJ’s QE move was seen as tepid, at beast.

GBP rebounded strongly today, aided by the EUR/GBP flow discussed above as well as lowered fears of contagion from Dubai World’s debt restructuring. We reached 1.6640 before stalling. Chinese selling was rumored into strength.

Commodity currencies traded on a firmer note throughout the US session as the risk trade rebounded strongly as the Dubai story faded. The RBA rate hike and comments from Canada’s Flaherty playing down the idea that any extraordinary measures will be used to weaken the Loonie.