FOREX IN REVIEW

No major announcements hit the wire yesterday but the market was full of rumors surrounding the possibility of the ECB capping the yields on sovereign bonds. This rumor was speedily dismissed by the ECB while the German Bundesbank criticized ECB bond purchases. Longer dated Spanish bonds have fallen to the lowest yields in almost two months, with 10-year debt at 6.282%. That was not enough to shield equities which were red across the board. The Spanish IBEX led major indices lower, plunging -1.21% followed by a -1.01% slide in the Italian MIB and -0.68% fall in the Swedish OMX. EURUSD has bounced between gains and losses, climbing to 1.2356 while GBPUSD is mostly unchanged at 1.5717.

Asian stocks are trading mostly higher in the overnight session, as the Australian ASX leads gainers, rising 0.56% following comments from the Reserve Bank of Australia. The RBA meeting minutes showed that another rate cut was not considered in light of inflation and growth which remained intact considering the global slowdown. AUD strength is largely attributable to higher interest rates and raw commodities export strength plus SNB diversification of currency reserves. AUDUSD has ticked 0.36% higher to 1.0482. Meanwhile, the Nikkei continues its winning streak, adding 0.13% as the yen strengthens slightly, with USDJPY falling -0.11%. The Hang Seng is unchanged at 0.00% as Chinese policy makers add record liquidity to ease short-term debt markets.

No major announcements made headlines in U.S. markets yesterday ahead of this week's housing data. Volume was ebbing near year lows as all major indices closed unchanged or marginally lower. The S&P 500 did not move while the Nasdaq closed -0.01% lower followed by a tiny -0.03% drop in the Dow Jones. Soft commodities continued to show activity with soybean futures climbing 0.92% and coffee rising 0.83%. Cocoa was substantially weaker, falling -1.39% while corns climb continues unabated, trading at $825.50 per bushel as crop damage becomes more evident. Silver has climbed 0.36% following a surge in the overnight session while copper rebounded from yesterday's losses, adding 0.31%.
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