Day Wrap-Up: Euro ends on a mega run-up (Barcelona) – With some investors still bewildered at the colossal recovery from the Euro, some even thinking this may be as good as it gets for quite some time, the truth is that the ailing European shared currency has passed in a matter of days from having a scary outlook to now be wanted by most, short-term view.

Despite the momentum may not last, the Euro has been centering all market attention this week, thus order flow was building up for a big boom. The explosion came, and Euro simply skyrocketed; the movements were triggered by the success of both Spain’s and Italy’s bond auctions, joining Portugal on its stellar debt placement from yesterday.

Besides, Japan and China’s support to buy European debt helped, but also some unexpected remarks by ECB”s Trichet on inflation, shcoking the market, and helping to overstretch the Euro rally.

EUR/USD closed at daily highs, near 1.3350. EUR/JPY made it much higher than yesterday, extending gains to hit a fresh 1-month high past 110.50. EUR/GBP has its biggest daily rise in months, landing at 0.8430/40 by NY close. EUR/AUD also flew to higher ground, gaining over 250 pips to surpass 1.3400.

The rest of currencies behaved at the expense of the Euro, with the USD weakening further, the Aussie being challenged through the second part of the day, while the Japanese Yen resumed its slide to lower levels, as the risk-off environment continues to hammer the safe-haven asset.

GBP/USD tested 1.5870, but pulled back to 1.5830 late US trade. USD/CHF had a big bearish turn, drifting from highs at 0.9750 to end below 0.9650. AUD/USD whipsawed to finished unchanged.

In the fundamental front, unemployment claims in the US went up to 445K, its Trade Balance came out better than expected at -38.3B, PPI m/m rose above expectations to 1.1%. Fed’s Ben Bernanke crossed the wires today, quoting: “Employment not growing as fast as would want it to, with economic growth between 3% – 4% range reasonable.

The stock market in the US was generally lower, with S&P 500 retreating 0.20% from its recent +2-yr high. Oil also pulled back to $91.00/bbl, while Gold had a strong fall to levels below $1,370.00/oz.


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The Art&Science of Trading Gold
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