- Trichet signals rates hike ahead; perhaps as soon as April
- US weekly jobless claims fall to 368,000 from 388,00; 4 week moving avg below 400,000 to 389,000
- BOE’s Bean: Inflation may be more persistent next year than forecast
- ISM non-manufacturing index rises to 59.7 from 59.4
- Natl Fed of Small Business: Job creation trend decidedly positive
- US 10-year note yield rises 9 bp to 3.56%; German 10-yr bund rises 13 bp to 3.33%
- S&P 500 index rises 1.7% to 1331
- Oil falls $0.41 to $101.80; gold falls $20 to $1415
We knew rates may rise coming into the meeting but we did not expect Trichet to be quite so Transparent as to suggest they may rise as early as next month. EUR/USD shot higher as soon as Trichet uttered the phrase “strong vigilance” and kept right on going, attracted by stop-loss buy orders, barriers and an important trendline. Only the trendline, drawn near 1.3980 was able to constrain the single currency.
US economic data was quite upbeat, helping fuel a surge in EUR crosses as USD/JPY and USD/CHF rose while the buck fell against the euro. EUR/JPY hurdled 115.00 in late afternoon trade while EUR/CHF pushed up to 0.9327, triggering a few small stops above 0.9320 but stopping short of large stops around 0.9330 through 0.9350.EUR/CHF rose to 1.3015 where it closes the session.
GBP/USD initially rose with EUR/USD on hawkish comments from the ECB’s Bean but huge buying of EUR/GBP sent cable tumbling, falling to 1.6250 from 1.6333. EUR/GBP rose above trendline resistance at 0.8567 and closes above 0.8580.
Commodity currencies were buffeted by selling against the euro, offsetting buying versus the dollar. The result? Range trade. USD/CAD: 0.9710/50, AUD/USD 1.0125/1.0180.