- Germany’s Ifo Institute sees 2.1% GDP growth this year in German, 1.5% in 2011
- G-20 communique draft holds few surprises
- Australia’s Rudd refuses to stand down; announces leadership challenge; vote 9 am local time
- Canadian retail sales fall 2% in April; ex-autos down 1.2%
- Fed lowers assessment of US economic outlook; rates steady
- Belgian business sentiment falls to -7.7 in June from -4.9 in May
- BOC’s Carney: Rate policy highly dependent on international forces and their impact on domestic demand.
- US new home sales tumble 32.7% in May after tax credit expires
- Soros: Euro a patently flawed construct; Germany damaging EU
- US sells $38 bln 5-yr notes at 1.995; bid to cover 2.58
- France’s INSEE sees GDP at 1.4% in 2010
- S&P 500 closes -0.3%, off lows on dovish Fed; Oil falls $2.11 on weak economy to $75.73; CRB falls 1.1%
A pretty choppy day in the US. EUR/USD found support at 1.2245 overnight and traders were content to trade a 1.2260/90 range until rumors of a French downgrade made the rounds. Shortly thereafter came out, the shockingly large drop in US new home sales sent the risk trade running for cover. Stops below 1.2240 were wiped out and EUR/USD skidded to an intraday low at 1.2209 before stabilizing.
Soros had very bearish commentary on the euro but the market was unable to sell off on the comments as it was already too short on an intraday basis. Stops were triggered ahead of the Fed above 1.2250 and again above 1.2280. The dovish slant from the Fed, singling out international factors and a depressed housing sector helped spark chatter among traders and analysts that the Fed may need to resort to quantitative ease again to spur US economic growth. That chatter died down as the session drew to a close.
USD/JPY fell below the 90.00 level and triggered stops below there and again below the 89.80 level. 89.73 was the low.
Cable was choppy but the pound traded firmly on the crosses for much of the session. EUR/GBP dipped to 0.8198 at its worst and closes at 0.8233. Cable reached 1.4975 prompting talk of barriers at 1.5000. Resistance comes in toward 1.5045/55.
Aussie was volatile today, pressured lower by the political upheaval which exploded this morning as well as risk aversion on US double-dip fears. Prices rebounded late on a short squeeze around Fed time, reaching 0.8379. Expect range trade below those levels until the political landscape clears later this morning in Australia.
USD/CAD zoomed this morning as hopes for a series of BOC rate hikes dimmed further. Retail sales were quite week and Carney has been downplaying talk of further rate hikes amid global economic woes. 1.0461 was the intraday high with the afternoon dip limited to 1.0365.