- Multiple ECB speakers note availability of non-standard methods (QE) including Papademos, Liikanen and Sramko
- Geithner, Bernanke dismiss notion of dollar losing reserve status
- Germany confirms view that economy will shrink 4.5% in 2009
- Richmond Fed index rebounds to -20 in March from -52 in February
- US government home price index rises 1.7% in January from December, falls 6.7% y/y
- Almunia: Dollar will be the reserve currency for long time to come
- IMF economist Lipski: New reserve currency will receive serious consideration
- Barney Frank: Not all TARP participants need pay caps
- BOE’s King: Need to be ready to raise rates quickly
- US equities give back partial gains, falls 2.1% with bulk of losses coming late
EUR/USD fell first thing in New York trade, sliding to 1.3480, just below Monday’s low before rebounding to 1.3585. Much of the session was spent range-trading but as the session wore on, EUR/USD longs felt this nagging sense that the explosive upside gains had already been had and a tougher slog lay ahead. Yesterday the EUR could not take advantage of the big equity rise and today it could not benefit from talk China was looking to ditch the buck. If it couldn’t go up on that combo, what would make it go up became the question. Profit-taking accelerated late in the New York afternoon as US equities began to give back a fraction of its recent gains. The one notable flow we picked up today was talk that a big us investment bank was a buyer of EUR 1 bln in in 1-month 1.30 EUR/USD puts.
USD/JPY found support on dips to 97.65 in New York but rallies were limited by heavy profit-taking in EUR/JPY. The cross spiraled lower with EUR/USD in afternoon trade.
Cable was a standout as an unexpected pop in inflation along with comments from Governor King that he is ready to tighten rates quickly once the economy turns helped support the pound.
Commodity currencies were undermined by stalling ,omentum and a deflation of the reflation trade after days of strong buying. AUD closed at 0.6955 after threatheing 0.7100 overnight.