ForexLive US wrap-up: Risk rally rolls on

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ECB leaves rates unchanged but announces multiple refi-operations extending out to as long as 13 months with full allotment. Covered bond buying program revived, EUR 40 mln to be purchased. Decision to hold rates steady was not unanimous; ECB will not  provide leverage to EFSF; that's up to governments Bank of Portugal forecasts deeper GDP contraction next year; government will need significant extra measures this year US jobless claims up 6k to 401k. lower than forecast ECB lending survey: Lending standards tightened EU's Juncker: EFSF could not handle Italy aid, EU may need to renew Greek aid program; finmins to discuss EFSF leverage Senate may vote on China currency bill today; Passage in House less certain Merkel: Taking warnings on European bank capital seriously BOE Gov. King: Poor global data spurred QE revival Obama gives Merkozy until G20 to get concrete plan together Dutch parliament passes EFS expansion S&P 500 rises 1.8% to 1165; third straight rise US 10-year note yields rise 10 bp to 1.99% CRB index rises 2%, WTI up 3.7%; Gold up $10 to $1651 EUR/USD initially fell in the wake of the ECB decision to hold rates steady with many concerned the bank had fallen behind the curve amid a deep sovereign debt/banking crisis. Lows of 1.3242 were recorded early in the presser. Very aggressive steps to flood the banking system with all the liquidity it can handle helped improve spirits later in the press conference and set off a strong risk rally. European banking shares bounced and US equities followed. By mid-afternoon in NY we were in a full-fledged short-covering panic, reaching 1.3450 before stalling. The 10-day moving average near that level helped cap the advance. GBP/USD was torpedoed by the BOE's decision to crank up the printing presses and churn out another GBP 75 bln. Prices slumped as low as 1.5272/75 before rebounding as the dollar lost ground on easing risk aversion as rising equities. Cable  recouped all the ground lost after the BOE announcement and closes not far from where it was at noon in London, at 1.5445. Commodity currencies were beneficiaries of the improved risk backdrop with AUD/USD. for example, jumping about 150 pips and closing near the higher end of the range at 0.9750. USD/JPY traded in comatose fashion, trading 76.57/84 ahead of the BOJ tonight.  
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