Markets were quite choppy and rumor driven during the US morning. Interest rate speculation was particularly high.

Talk of a discount rate hike in the US made the rounds again this morning as did talk that the Fed would drop its “unusually low rates for an extended period” language knocked EUR/USD down from just above the 1.3600 level all the way to 1.3545 level before edging higher in glacial afternoon trade, to end just below 1.36. 1.3628 was the fleeting NY high.

The market still seems very balanced today with a healthy portion of the market seeing a technical bottom made in EUR/USD with an equally large camp unconvinced by the EU’s reluctant rescue package. The fact that Greece paid 10 times what the US pays for 1-year money today gives the skeptics plenty of comfort.

USD/JPY traded in very choppy fashion after getting an overnight lift on hopes for new deflation fighting steps by the DPJ as well as talk of a dramatically lower yen by the ruling party. US Treasuries were volatile, falling in yield early, before rebounding in yield as the morning wore on. 2-year notes traded in a 1.02-1.07% range with USD/JPY tracking pretty closely.

EUR/CHF was knocked lower by talk out of a NY hedge fund advisory that the SNB could tolerate EUR/CHF as low as 1.400. We fell from 1.4395 to 1.4330 on the news.

AUD/USD edged up in US afternoon trade and ends the day close to US highs at 0.9285. Intel’s strong earnings report was a boost for the risk trade. 0.9220/30 is shaping up as very solid support on dips.