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Again the EUR fails to weaken!

The lack of a EUR selloff this morning, in the wake of a poor Euro industrial order print (-0.7%) and ifo data (108.7), seems to prove that the market is no mood to go heavily short ahead of Bernanke’s speech this Friday. Mind you, the ECB stepping in again to buy some Italian bonds, is making investors choice a tad easier. The market very soon will need to justify the reality as it appears to be getting ahead of ‘this’ announcement.

It seems that the BoJ has become another Cbank resigned to the fact that fighting the strength of its own domestic currency outright is too expensive, you only have to ask the SNB what that’s like. After another downgrade overnight by Moody’s (Aa3 to Aa2), the Japanese government has introduced new policy measures to assist exports. They will introduce a credit facility to fund procurement of energy and other resources from abroad. A credit facility to help Japanese companies engage in M&A abroad. The government will fund these facilities by releasing FX reserves ($100b) to JBIC to lend on to Japanese firms. With no intervention or new monetary ease mentioned will probably allow the JPY to appreciate that bit further, even more so if the SNB introduces a floor.

The US$ is weaker in the O/N trading session. Currently, it is lower against 8 of the 16 most actively traded currencies in a ‘whippy’ session.

Last week’s record euro shorts at odds with daily chart pattern on eurodollar which is showing series of higher lows.