• US durable goods orders fall 0.9%, much weaker than expected
  • US weekly jobless claims fall 5,000, to 382,000
  • Irish government says does not expect rate cut on bailout loan at EU summit; Waiting for stress test results before renegotiating
  • Bloomberg: EU sources see Portugal needing EUR 70 bln bailout
  • Two earthquakes in Asia; one in Thailand, one in Myanmar
  • MNI’s Beckner: Fed officials heeding public’s inflation jitters
  • SNB’s Danithe: Policy aims for price stability
  • Portugal downgraded to A- by Fitch
  • S&P 500 rises 0.9% to 1310
  • US 10-year note yield rises to 3.40%, up 6 bp on the day
  • Gold trades to new record of $1447.40 but loses gains. closes below Wednesday’s low.

EUR/USD was the uber-currency today, opening nearly a cent above European lows and adding another 70 pips on top of those gains to reach 1.4220 intraday. It absorbed intense talk of a Portuguese bailout (as well as a downgrade by Fitch), rumors of heavy corporate sales of EUR for an M&A deal and signs that the Fed is looking at tweaking its “lower-for-longer” message in the coming months to stave off rising US inflation expectations.

1.4150 is now solid support on dips while trailing stops are seen in the 1.4135/40 area.

GBP/USD was choppy today but it ends in the lower part of its range, just above the 1.6100 level as the market fears a bout of stagflation in Old Blighty after the larger than expected drop in UK retail sales today. The BOE remains in a damned if it does/damned if it doesn’t situation with regard to monetary policy. It can’t tighten owing to the weak economy but the weak economy is not retraining inflation. EUR/GBP is in heavy demand as a result of M. Trichet’s itchy trigger finger and closes at 0.9798.

USD/JPY edged higher in its very narrow range, ending just below 81.00 as firmer US yields and a sprint to the topside in AUD.

AUD triggered stops above 1.0200 as its impressive rebound from last week’s risk aversion turned into this week’s risk-assumption. Stocks continue to rally despite Portugal, Libya and Japan, so why shouldn’t AUD? AUD reached 1.0228, a mere 30 pips from its all-time high…It ends at 1.0207.