- Turning point for global economy Sept/Oct this year: IMF’s Strauss-Kahn
- German bank West LB in spotlight; Dow Jones reports nearly failed over weekend
- Conference Board’s employment trends survey rises to 89.9 from 89.7; first rise in 16 mos
- World Bank head bullish on China; welcome moves to Yuan flexibility
- Fed’s Tarullo: Economy near bottom; recovery to be “painfully slow”
- Obama speeding stimulus spending
- IMF: Eurozone bank clean ups lacking; ECB should look at refi cut
- ECB’s Weber: Must quickly reverse accommodation as economy recovers
- ECB’s Stark echoes Weber; Exit strategy needed. Rates appropriate
- EU’s Almunia: Must consolidate budgets once growth returns
- US rates continue to rise in US; 2 year note reaches 1.42%, 10-year 3.90%
- US equities recover most losses, close down 0.1%
The dollar lost some of its overnight gains in US trade, as the pound rebounded sharply in afternoon trade. PM Brown survived his latest leadership challenge and emerged bruised but still in power today. That was not necessarily a surprise, so I am pinning the sterling recovery on the odds of a sale of BGI by Barclays to a US buyer. Cable broke above 1.6000 at midday and reached the 1.6100 level late in the session. Short-covering was the driving factor, as near as I could discern.
EUR/USD rose as well, but the pace was about half that of the pound. Heavy EUR/USD offers between 1.3900 and 1.3925 were absorbed along the way but follow-through has been limited. Large speculative longs continue to liquidate positions on strength, traders relay.Weber and Stark, the German enforcers at the ECB took to the microphones to talk exit strategy, setting the stage for the ECB to withdraw their excess liquidity as (if?) the economy improves.
USD/JPY dipped to 98.20 where it found support from the downtrend broken on Friday, now at the 98.20 level. That breakout was re-test and held and USD/JPY rose to 98.50 late as US yields continued to surge.
Commodity currencies recovered some of their recent lost ground, helped in part by comments from the World bank’s Zoellick. He sees China’s rebound continuing. AUD retook the 0.7900 level on short-covering during PM trade.