- US December CPI rises 0.1%/0.1% ex-food and energy
- US industrial production rises 0.6% in December, Capacity use up72.0%
- Empire State Manufacturing index rises to 15.9 from 4.5; better than expected
- University of Michigan consumer sentiment 72.8 in January
- EU’s Juncker: Greece needs to deal with problems on its own
- ECB’s Stark: No chance of euro zone break-up; Money supply growth flat to down in coming months.
- Fed’s Lacker: Reasonable growth this year; inflation risks creep up with recovery
- Euro zone source: Finance ministers losing patience with Greece: Reuters
- US yields fall sharply; 2-year notes 0.87% from 1.20% two weeks ago; 10-year notes fall another 6 bp to 3.67%
- Oil falls $1.45 to $77.95, gold down $15 to $1130
- S&P 500 falls 1% to 1136
EUR/USD held below the 1.44 level throughout the US session despite tepid economic data and the German government rejecting talk of Merkel stepping down from the Chancellorship. Greek concerns remained at the top of traders minds as many fear that Greek government bonds will soon be unfit for use as collateral at the ECB and that could set off a domino-effect throughout the European banking system.
Central banks were steady buyers in the 1.4350/60 area but a US investment bank managed to trigger stops in the 1.4340s just as the IMM was closing for a long holiday weekend. From 1.4338 lows, prices rebounded 50 pips late in the session.
EUR/GBP was sold again today as the UK offers somewhat of a safe-haven from Greece as standing outside the euro zone and not having a currency named “dollar”. The cross fell as low as 0.8811 at the height of the Greek jitters but rebounded sharply into the London close. Stops above 0.8845/50 were tripped and a jump to 0.8870 was seen before an afternoon slide unfolded to 0.8824. We end at 0.8836.
Cable fell through support at 1.6250 and triggered stops as EUR/GBP rebounded ahead of the London close. It fell as low as 1.6212 but rebounded to end the day at 1.6270.
AUD was pressured by a general bout of risk aversion as stocks and commodities gave ground in the US. It dipped as low as 0.9214 and ends at 0.9235.
USD/JPY was pressured by a fall in US interest rates and unwinding of longs taken by hedge funds early in the New Year. A rally was seen to the 91.15 area after reports surfaced that a DPJ MP was taken into custody regarding the on-going fund-raising scandal. Heavy sales by a US investment bank knocked it as low as 90.68, thereafter. Large stops from hedge funds are rumored now around 90.30.
Disclosure: no positions