The market, after all the excitement yesterday, was quiet today. This trend may continue with the approaching Friday holiday.
- The closely watched US housing numbers showed some strength today but it is coming off a very low base. Stocks and the risk on trade derived some support from this data release.
- Treasury’s Geithner said not to worry about the US AAA credit rating. Not sure what else he could say. The politicians will come together for some real deficit reduction measures and pigs will soon fly.
- Gold flirted with $1500 and backed away as this large “even” number may offer some resistance.
- President Obama was commenting on the oil market. The US must produce more oil, get greener, and the oil prices are being driven higher by the evil speculators. Nothing new to see here so please move along.
- Bini Smaghi said the US should heed the credit warning and raise rates before the imbalances grow. The US will probably ignore his advice as who can see any imbalance when inflation is only see in food and energy.
US stocks regained about half their losses incurred on Monday. The S&P 500 closed up 7.48 at 1312.62. US investors seemed to come to terms with the S&P credit warning and hoping that this shot across the bow may spur Washington to tackle the problem.
EUR/USD drifeted higher throughout the day in largely listless trading. A high of 1.4353 was seen in afternoon trade. It settled to trade around 1.4335.
USD/JPY attempted to visit the overnight low near 82.32 but this pair ran into real money bids ahead of this level. Risk on at the end of the day moved the pair above 82.50.
USD/CAD and AUD/USD both ran into profit taking today. USD/CAD saw a higher than expected inflation numbers but ran into strong bids in the .9550 area.
GBP/USD saw most of its action around the 4 PM London fix. The rest of the day traded within the range established by buy stops triggered around the fix and fix selling pushing it lower.
Trading desks in NY are staffed more lightly than usual as this a school holiday week and many traders are with their families enjoying the sun and fun somewhere. With the holiday approaching this Friday we may see muted trading as positions are trimmed and squared as the weekend nears.
I will turn you over to Sean now. See you tomorrow.