Euro Hits a High Above 1.56, SNB Keeps Interest Rates Unchanged (page 2 of 2)

In other words, don't expect them to stop the Euro from rising anytime soon. In addition to the US CPI report tomorrow, we are also expecting the Eurozone CPI numbers. Like the US data, they should be firm. Meanwhile the Swiss National Bank kept the target range of their 3 month Libor rate at 2.25 to 3.25 percent. They feel that even though the Swiss economy is still strong and inflationary pressures are mounting, slower global growth could take some of the steam of Switzerland's economy. Their bias is neutral and for that reason, we expect them to remain on hold for the rest of the year.

Australian and Canadian Dollars Scream Higher as Gold Hits $1000 and Oil Hits $111

The Australian, New Zealand and Canadian dollars were the best performing currencies today against the US dollar. The strong rallies in these 3 currencies were driven by better than expected economic data and milestones in commodity prices. Last night, Australia reported a 36.7k rise in employment. The Australian labor market is the strongest in 33 years thanks to 16 straight months of job growth. New Zealand also reported growing consumer spending, which comes in stark contrast to the contraction in spending reported by the US today. Canada reported lower capacity utilization in the fourth quarter, but the third quarter numbers were revised higher. As for commodity prices, gold hit an intraday high above $1000 an oz while oil prices rose to an intraday high above $111 a barrel.

Japanese Yen Crosses Recover as Stocks Reverse Intraday

After having been down over 200 points, the Dow Jones Industrial Average staged a remarkable recovery. In reaction to the move, the Japanese Yen crosses have also rebounded, but other than AUD/JPY, NZD/JPY and CAD/JPY, all of the Yen crosses remain in negative territory. Although it may be tempting to buy into the carry trade recovery, we continue to warn against doing so. The financial markets are very volatile and traders are still risk averse. This should keep a lid on any meaningful recovery.

British Pound Hits 2 Month High

There has been a lot of action in the British pound today but none of it was related to the any UK economic data. The pound dropped to almost a 2 year low against the Japanese Yen, saw a strong intraday reversal against the US dollar and remained unchanged against the Euro. The only news out of the UK is a report that a UK hedge fund is looking to pump money into Washington Mutual.