Markets:
- Gold down $40 to $2372
- US 10-year yields up 1.6 bps to 4.576%
- WTI crude oil down 58-cents to $85.63
- S&P 500 up 0.7%
- AUD leads, CHF lags
The ECB decision led to surprisingly-little in terms of price action. The euro wobbled in a 1.0700 to 1.0750 range with the main message that the ECB plans to cuts but it needs to continue to gain confidence on falling inflation. June rate cut odds edged to 77% from 70%, particularly after the usual ‘sources’ reports spelled it out. Still, if you didn’t know there was a central bank decision, the euro chart wouldn’t have stood out.
USD/JPY finished above 153.00 today but only fractionally higher from yesterday. That’s still disappointing for Japanese authorities as they try to swim against the current of yen weakness. The usual suspects tried to pushback yesterday but it’s tough when dollar buying is so strong. The pair did briefly fall as low as 152.77 as US yields fell earlier but when they rebounded with the help of a poor 30-year auction, the bids firmed up.
Cable tested 1.2500 to the downside but couldn’t get through and rebounded to 1.2555.
USD/CAD hit a four-month high of 1.3725 but recovered as broader risk sentiment reversed and stock markets recovered much of yesterday’s decline, led by chipmakers and Apple. The pair ended up finishing below the figure and the loonie fell for a second day.
AUD and NZD did better, holding gains and finishing near the best levels of the day. Still, they were small bounces after big declines yesterday.
The star of the show was gold once again. After it erased the CPI declines it hit the afterburners, soaring to $2375, a new all time high and a $42 gain on the day.