- ECB holds rates unchanged, called rates appropriate; Trichet says market was too pessimistic on Europe’s ability to act to head off sovereign debt crisis; stress tests to help confidence
- US weekly jobless claims decline to 454,000
- IMF: Dollar somewhat overvalued on a medium-term perspective; US debt cut would help growth
- NIESR: UK GDP rise 0.7% in Q2
- Greece approves pension reform bill
- US consumer credit falls $9.2 bln in May; 15th drop in 16 months; weaker than expected
- S&P 500 rises 0.9% or 10 points to 1070; 10-year note yield rises back above 3% to 3.025%.
EUR/USD breached the 1.2700 briefly this morning, spurred on by soothing comments on the stress test from the ECB’s Trichet as well an admonition from the central bank chief that markets have been too pessimistic on Europe’s crisis response abilities.
Firming equities were also a feature, building on overnight rallies. The S&P continues to spark covering among a very bearish group of traders.At midday, stocks and the euro eased some as rumors that a German bank had “failed” its stress test made the rounds. EUR/USD bounced from the 1.2650s amid talk of Asian =central bank demand on dips and ends the day at 1.2692. Trendline resistance will dip to the 1.2708 level once the calendar flips over to the Asian session.
Cable bulls received a scare as the pound slipped within a quarter-dollar of its range base at 1.5080. It bounced back nicely late in the day and ends at 1.5160. 1.5230/40 is still resistance on rallies.
Commodity currencies were in demand early in the day as risk appetites peaked first thing this morning. AUD reached 0.8790 and end the session on a firm note at 0.8760.
USD/CAD fell as low as 1.0375 before a bounce and ends at 1.0440. The CAD looks like a relative under-performer today.
USD/JPY shot higher early in the US session, following stocks higher. Risk assets were in wide demand early in the day. Profit-taking set in before long and prices backed off from 88.64 highs, dipping toward 88.30 at mid-afternoon. We end at 88.40.