- Gold closes above $1450 for the first time; ends at $1455
- EU: No mechanism for Portugal bridge loan
- Soros: Euro rescue mechanism flawed
- US non-manufacturing ISM index falls to 57.3 from 59.7; more than expected
- US budget battle remains at stalemate; negotiations continue ahead of Friday deadline
- Portuguese banks ask central bank to seek EUR 15 bln bridge loan
- Fed’s Kotcherlakota: Fed committed to containing inflation
- FOMC minutes show sharp divide between inflation hawks, doves; QE 2 seen ending in June
- S&P 500 closes virtually unchanged
- US 10-year note yield rises 6 bp to 3.485%
- Oil falls $0.60 to $107.85
EUR/USD fell in early US trade, touching 1.4151 before rebounding sharply. The catalyst for the bounce was a report from Medley Global Advisors suggesting the ECB will hike 25 bp on Thursday, the first in a series of hikes, and that they will shift their language to tip progressive normalization of policy. With the market short intraday on sovereign debt and European banking woes, we quickly bounced through 1.4200. Weaker than expected ISM data also fueled the rally. We reached 1.4245 highs in thing trade after the FOMC minutes. Heavy gold buying helped buoy the euro throughout the latter part of the session. We close at 1.4220, still holding below crucial resistance between 1.4270 and 1.4282.
EUR/JPY was an extremely supportive factor today as the cross broke cleanly through 120.00 on its second attempt and reached 120.69 at its best levels. Risk-on after the Chinese rate hike failed to derail mood…
USD/JPY extended its gains, trading as high as 84.88 in the wake of the FOMC minutes. A 6 bp rise in US short-term rates was a major support for the greenback as was interest to sell JPY against all manner of crosses today.
BNY data shows heavy flows out of PIG bonds going into emerging markets, not bunds or Treasuries…Risk on!
