- ADP employment report: Private payrolls up 93,000; biggest rise in 3 years
- ISM manufacturing index 56.5; as expected
- EU: First Irish bailout payment contingent on passage of 2011 budget
- US auto sales firmer in November
- EU’s Rehn: ECB could do more to support stabilization
- EU’s Barroso: Confident ECB will protect euro
- BOE’s Dale: Slack should reduce inflation
- Goldman: Gold to rise to $1475 by 2012
- German finmin: Euro’s existence not threatened; determined to protect it
- Goldman raises 2011 US GDP forecast to 2.7% from 2.0%
- Reuters: US to increase IMF contribution for European bailout fund
- WSJ: US not discussing larger IMF contribution
- S&P 500 rises 2.2%; US 10-yr note yield rises 18 bp to 2.97%
Wow.
We’ve written ad nauseum in recent sessions about the thrills and spills of thin December markets. Today, on the very first day of the very last month, the market made it a December in which many a trader wanted to surrender.
The biggest one-off move of the day came as Reuters ran a rogue headline claiming the US was prepared to pony up additional billions for the IMF to use for a European bailout. EUR/USD soared from the 1.3065 are to 1.3183 on the report.
In the process, we triggered stops above strong resistance in the 1.3135/40 area and broke well above the 100-day moving average, which had been acting as resistance.
A denial of the US contribution to the IMF from the US Treasury sent the euro briefly below 1.3100 but intraday shorts were forced to pay up to get back positions lost on the earlier spike.
Also supporting the euro this afternoon are rapidly growing expectations for the ECB to return to European bond buying in a very big way. Some even expect Trichet & Cie to abandon sterilizing bond purchases and joining the Fed and BOJ in the QE Club.
EU officials applied heavy public pressure on Trichet today to pull out all the stops and bond markets responded. If Trichet does not accommodate the markets and the politicians, look for risk aversion to return in a big, fat hurry.
1.3180/1.3200 is solid resistance for EUR/USD near-term. 1.3095/00 is short-term support.
USD/JPY was supported by much firmer US yields today. Strong economic data and a lessening of risk aversion pushed interest rates up. We end the day at 84.20
EUR/JPY enjoyed a big rally as well.Getting a boost from both the EUR/USD and USD/JPY legs of the cross.