- Democratic senatorsjumping ship on reconfirming Bernanke
- Greek bond spreads widen further; CDS reach records
- SNB’s Hildebrand vows to fight excessive franc strength
- ECB’s Weber: Orders data suggests good first quarter in Germany
- Sarkozy: Europe shouldn’t be a victim of undervalued currencies
- Greenspan: Bernanke should be confirmed: CNBC
- UK terror threat level raised to “severe” from “substantial”
- S&P 500 falls 2.2%, down 5.3% from 15 month highs on Tuesday, closes at 1092
- Oil falls, $1.83 to 74.23; Gold closes at $1092, above $1083 lows
- US 2-yr yields edge down to 0.79%; 10-yr 3.60%
It was a volatile day to cap a volatile week. Risk aversion was the theme again today but with a twist: the US was source of the risk, not just China and Greece. Obama’s bank bashing continues to undermine markets, sending stocks tumbling and the VIX soaring. With the US a big source of uncertainty, markets were reluctant to buy the greenback as a safe-haven.
With banks now public enemy number one, at least in the corridors of power in Washington, Ben Bernanke, the Fed chair seen as the architect of the bank bailout culture, finds his nomination suddenly in real danger. That added to the stock market decline and kept the dollar on the defensive against the euro.
EUR/USD swung in a 1.4084/1.4181 range in the US, knocked down by fresh highs in Greek yield spreads but boosted by Bernanke jitters as Senators turned against Gentle Ben. A stock swoon in the afternoon helped send EUR/USD down to the 1.4130s late in the day.
USD/JPY was weighed down by continued unwinding of carry trades and a slow drip lower in US yields. Solid US investor demand was seen on dips into the 89.80s.
Cable was badly hurt today as weak UK retail sales got the ball rolling to the downside. Very large buying of the EUR/GBP cross by a UK clearing bank set the tone and the pound stayed on the defensive for much of the session, though trading was very choppy. 1.6075/1.6180 was the US range with a close around 1.6110.
AUD/USD saw demand at the 16:00 GMT fixing which helped lift prices as high as 0.9092 before risk aversion sent prices back to near 0.9000 at the close.
The CHF has been a big beneficiary of risk aversion of late but SNB president Hidebrand sought to slow the one-way traffic, saying he would take steps to prevent excessive CHF strength. EUR/CHF rallied from 1.4717 to 1.4746 before ending back where it started the surge, at 1.4717.
Disclosure: "no positions"