- Will they or won’t they? Ireland denies multiple reports that it is in talks to secure emergency funding from EU
- Portuguese central banker: Jitters are justified by Portugal’s poor fiscal record
- University of Michigan consumer sentiment index rises to 69.3 (prelim Nov) from 67.7 (final Oct)
- IMF/EU may press Greece for more cuts on missed deficit target
- CRB posts biggest 1-day fall in 18-months, down 3.6%
- Gold falls $50 intraday, closes at $1368; Oil falls 3.5% to $84.70
- S&P 500 falls 1.2%; US yields rise 14 bp to 2.78%
Very volatile trade today in the US today followed extremely volatile markets overnight.
EUR/USD rallied as far as 1.3777 on short-covering as EU heavyweights indicated that their plan to require investors to bear the risks of dodgy sovereign debt only kicks in in 2013. That, plus growing expectations that Ireland will ultimately tap the EFSF for external funding saw yields on Irish debt tumble 75 bp today.
The EUR shed half of its gains from overnight lows however as investors ran headlong for the exits on trades linked to QE2. Commodities, stocks and bond yields all fell while the dollar recouped morning losses to end little changed compared to Thursday’s closing levels. EUR/USD fell back to 1.3660 in early afternoon and closes around 1.3690.
USD/JPY was supported by rising US yields but liquidation of AUD/JPY, CAD/JPY and other commodity-linked trades helped make for choppy trade in USD/JPY. We end around 82.50.
GBP was surprisingly strong today, holding above the 1.61 during the US session, trading between 1.6120 and 1.6185. Most dealing was seen between 1.6120 and 50 with the pound well-supported on the crosses, particularly GBP/JPY, which is surprising given the risk-averse atmosphere today.
AUD bounced during the London session but was sold off again in New York on risk aversion. Jitters ran high today that China may hike rates as soon as the weekend after posting firm CPI data this week. Perhaps we see a relief rally early in Asia Monday if no hike is immediately forthcoming. We close at 0.9860 after falling from 0.9940.
Same story in CAD. The Loonie fell along with commodities as the dollar bounced as high as 1.0129 this afternoon. We end at 1.01.
Have a great weekend one and all.