ForexLive US wrap: Stress tests pass with a mild flurry

Nine European banks fail stress test; 16 others narrowly pass; only EUR 2.5 bln in capital set to be raised EU to hold special summit on July 21 on financial stability and Greece S&P puts Freddie/Fannie and other US government-linked borrowers on review for downgrade US CPI falls 0.2%; core rise 0.3% in June US industrial production rise 0.2% in June Empire State Manufacturing index -3.8% in July; weak University of Michigan consumer sentiment survey slides to 63.8 from 71.5 US 10-yr note yield falls 5 bp to 2.90% S&P 500 rises 0.5% Weak US data and rumors of up to 20 European banks failing the EBA stress tests helped send EUR/USD below 1.4100 twice intraday but buying out of China helped contain the dips. We rallied to 1.4190 after only nine banks failed the test, prompting a short-lived relief trade. We spent the afternoon in a disinterested range, mostly in the 1.4140s. All in all it was a very quiet session. US data remains disappointing and the budget impasse remains intact while the clock continues to tick toward midnight. CHF remains the market's favored hidey-hole while the AUD was smacked in London on reports of Westpac forecasting RBA cuts ahead. Have a great weekend, one and all and see you all back here first thing Monday morning.