- Merkel:Summit to help determine future of Europe; Sees growth pact being accepted.
- ECB’s Praet states interest rates can fall below 1% and that cuts are justified if they contribute to guaranteeing price stability in the medium term.
- Goldman Sachs now sees ECB cutting benchmark rate .25% to .75% next week
- U.S. durable goods rise 1.1 % (better than expected .5%)
- U.S pending home sales up 5.9% (much stronger than forecast of 1.3%)
- Chicago Fed Midwest Manufacturing Index decreased 1% in May
- S&P rises 0.9% to 1332
- US 10 year note yield unchanged at 1.625%
- Oil rises $1.00 to 80.40
- Gold rises $2 to 1575
EUR/USD slumped early in the session after a Dow Jones report highlighted the risk of Chinese intervention to sell dollars against CNY later this year. This helped push down EUR/USD, GBP/USD and AUD/USD, the principle components of the Chinese reserve basket. Also helping pressure the EUR/USD in early trade is fears that little will be accomplished at the EU summit starting tomorrow and a forecast from Goldman Sachs for a rate cut at next week’s ECB meeting.
We fell to retest the strong area of support at 1.2440/45 but bounced from that level yet again, prompting mild short-covering that stalled in the high 1.2470s.
Risk rallies were relatively subdued today given the fairly upbeat US housing and orders data. Decent data cuts the odds of QE…AUD traded 1.0056/1.0088 in dull NY trading
USD/JPY got a brief intraday boost to the 79.87 level before losing steam and ending the day at 79.70.
Cable was hit hard at the US open, breaking trendline support and sliding below 1.555 for a time before closing in consolidation mode at 1.5563.
