Fear steamrolled sentiment. Equities fell 1.0% or more, with EU periphery bourses underperforming. In FX, USD benefited fr om the singular aversion to risk. This overshadowed generally soft US data. 'L et's Hollah for the Dollah!!'. USD gained 2.0% against NOK and SEK, and 1.0% aga inst EUR, NZD CAD, GBP and AUD. USD/CHF was up just below 1.0%. The decline in t he S&P 500 (-1.9%) brings the 200-dma at 1256 into play. As well, that brings trend line support back to the lows of March 2009 into play, and comes at a time when most major equity markets are already below their 200-dma. Adding to the challenges, WTI is 'flirting' with the early May low of$94.63/bbl, whic h turns the focus toward the 200-dma at $92.00, at a time when many other commodity prices are testing or below their own 200-dma. The Rays of Sunshi ne noted in yesterday’s comments were only a brief interruption amid a very challenging episode for the global economy, even though Chinese data provid ed a bit of hope very early on.
EUR: As it’s been for a while, Greece wa s the eye of the periphery storm. Reports of strife in Papandreou’s government added to general unease. News that he’ll form a new government today and seek a vote of confidence did NOT help the EUR. Risk sentiment remained under pressure. EU leaders are watched for solutions, but none seem forthcoming, or are still under intense debate. This also added to general unease. Ratings warnings o n French banks and Portuguese bank subsidiaries, also added to general unease . After smashing the 50-dma at $1.4426, EUR/USD is now testing the 100-dma at 1$.4150, a level last tested in mid-to-late May just below $1.40 and mid-February. Keep watch for the post-press conference May low at $1.3970. Periphery spreads v bunds: Greece 2-year, 2651 bps, 10-year 1478 bps: Portu gal 2-year 1093 bps, 10-year 772 bps: Spain 10-year 259 bps, but still below th e November 2010 high of 283 bps, but still very elevated.
USD: Note that in the 2008 mad scramble for USD funding, DXY rallied from 71 to almost 90. Amid the first EU periphery shockwave (2009/10) DXY rallied from 74 to 88. Even in November 2010, EU periphery issues helped lift DXY from 75 to 81. At present, DXY has rallied from 73 to 76. Subsequent crises have thus had less 'bang for the buck'. Generally poor US data (June Empire -7.79, cons: 12, May IP 0.1%, cons: 0.2 % and June NAHM HMI 13, (cons: 16) might have helped given the risk averse to ne, and did drag CAD back to the crowd after earlier being an outperformer. May CPI was a touch above expected, but had little impact.
GBP/USD also smashed through its 50-dma ($1.6372) and has also pierced the 100-dma at $1.6257. It is also testing t rend line support back to May 2010. EUR/USD and GBP/USD are sitting on some majo r support levels, more so for GBP/USD than EUR/USD, which might surprise you.
SEK is SIK: CAD/SEK has rallied to test the 200-dma (6.60), EUR/SEK, despite EUR’s woes, is now well above the 200-dm a (9.039) and above 9.1501 the 61.8% retracement of the Nov-Feb sell off. USD /SEK pierced 6.4269, the mid-May high, with the 200-dma at 6.5538 in focus. GBP/ SEK is atop the 200-dma at 10.4799. AUD tried to hold its RBA Governor Stevens ’ inspired gains, but it eventually gave way to the overarching risk averse t one. AUD/NZD remains up overnight, but off its highs of 1.3155. Keep watch for t he 200-dma at 1.3196, which was breeched on April 26th, and last tested in ear ly June. While keeping one eye on market tracking screens, also keep watch for AU consumer inflation expectations for June.
EUR: As it’s been for a while, Greece wa s the eye of the periphery storm. Reports of strife in Papandreou’s government added to general unease. News that he’ll form a new government today and seek a vote of confidence did NOT help the EUR. Risk sentiment remained under pressure. EU leaders are watched for solutions, but none seem forthcoming, or are still under intense debate. This also added to general unease. Ratings warnings o n French banks and Portuguese bank subsidiaries, also added to general unease . After smashing the 50-dma at $1.4426, EUR/USD is now testing the 100-dma at 1$.4150, a level last tested in mid-to-late May just below $1.40 and mid-February. Keep watch for the post-press conference May low at $1.3970. Periphery spreads v bunds: Greece 2-year, 2651 bps, 10-year 1478 bps: Portu gal 2-year 1093 bps, 10-year 772 bps: Spain 10-year 259 bps, but still below th e November 2010 high of 283 bps, but still very elevated.
USD: Note that in the 2008 mad scramble for USD funding, DXY rallied from 71 to almost 90. Amid the first EU periphery shockwave (2009/10) DXY rallied from 74 to 88. Even in November 2010, EU periphery issues helped lift DXY from 75 to 81. At present, DXY has rallied from 73 to 76. Subsequent crises have thus had less 'bang for the buck'. Generally poor US data (June Empire -7.79, cons: 12, May IP 0.1%, cons: 0.2 % and June NAHM HMI 13, (cons: 16) might have helped given the risk averse to ne, and did drag CAD back to the crowd after earlier being an outperformer. May CPI was a touch above expected, but had little impact.
GBP/USD also smashed through its 50-dma ($1.6372) and has also pierced the 100-dma at $1.6257. It is also testing t rend line support back to May 2010. EUR/USD and GBP/USD are sitting on some majo r support levels, more so for GBP/USD than EUR/USD, which might surprise you.
SEK is SIK: CAD/SEK has rallied to test the 200-dma (6.60), EUR/SEK, despite EUR’s woes, is now well above the 200-dm a (9.039) and above 9.1501 the 61.8% retracement of the Nov-Feb sell off. USD /SEK pierced 6.4269, the mid-May high, with the 200-dma at 6.5538 in focus. GBP/ SEK is atop the 200-dma at 10.4799. AUD tried to hold its RBA Governor Stevens ’ inspired gains, but it eventually gave way to the overarching risk averse t one. AUD/NZD remains up overnight, but off its highs of 1.3155. Keep watch for t he 200-dma at 1.3196, which was breeched on April 26th, and last tested in ear ly June. While keeping one eye on market tracking screens, also keep watch for AU consumer inflation expectations for June.
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