The dollar doldrums continued in NY trading as currency markets remained beholden to the equity market gyrations. Stocks in the US added 0.8%, paring about half of the intraday gains in the latter part of the session. Better than expected US initial jobless claims provided the catalyst as the weekly number printed just 521K after a 554K result the prior week. The seasonal factors next week become a little tricky on the back of the Columbus Day holiday and we are actually looking for a substantial rebound here.
Treasuries sold off following a sloppy 30-year auction which saw a relatively light 2.37 bid/cover while the rate came in nearly 4 basis points above market. Gold continued to glitter and the overwhelmingly long trade extended into fresh all-time highs above the $1060 mark â€ slipping a touch towards $1055 ahead of the close.
The USD was once again the proverbial whipping boy. The BOE's Trichet provided little in the way of support for the greenback, repeating his uninspiring comments from late last week that he appreciates the US view that a strong dollar is in their interest. EUR/USD squeezed up as the market gunned for stops above the 1.4810 zone. The pair would settle a touch lower but still retains its overall bid tone. USD/CAD printed a fresh low for the year as traders anticipate a better than expected employment number tomorrow morning. We would look for formidable support at the 1.0480 daily trendline now.