- German constitutional court hints at possible ESM decision delay
- ECB’s Weidmann: Can’t solve euro crisis with ever-larger funds
- BOE’s King: UK economy not showing expected recovery
- NIESR: UK econ contracted 0.2% annualized in June quarter
- Monti says he will leave next year
- IMF forecasts larger Italian deficit
- Russia dispatches war ships to Syria
- Spanish banks seeking aid will take haircuts on subordinated debt
- Greek deficit 12.3B euros compared to 14.9B last year
- Italy cancels bond auction
- Canada housing starts 222.7K vs 205K exp
- EUR/AUD breaks 1.20 for first time
- JPY leads, EUR lags
- S&P 500 down 0.8% to 1341
- Italian 10yr yields down 15 bps to 5.95%, Spain -25 bps to 6.81%
US traders punted the euro to fresh two-year lows despite the improvements in periphery bond markets after yesterday’s Eurogroup meeting. Fears about the German constitutional court and the relentless bearishness tied to Europe were evident.
The European lows were taken out the moment US trading fired up, falling to 1.2262 where layered bids ahead of Monday’s low sparked a rebound to 1.2300. A second wave of selling ahead of the European close hit 1.2236.
Buyers ahead of Monday’s lows in cable around 1.5470 and EUR/GBP selling helped cable but it was still a violent session. Corporate sales of EUR/GBP early but King’s downcast comments weighed. Later it was a whips after the European lows broke, slipping below 1.5500 and then shooting back to 1.5540, only to turnaround and make new lows at 1.5480. After Europe closed, the buyers returned as EUR/GBP made new lows, helping cable to 1.5519.
Gold rallied to $1600 and then dropped to $1565. Oil fell $2 to $83.99.