ISDA To Rule On Greek CDS
The dollar held onto most of its gains in the wake of Fed Chair Bernanke’s semi-annual testimony before Congress. He did not issue any revision to previous policy guidance but did acknowledge that the unemployment rate was falling faster than expected. That was enough to trigger a broad-based pullback in risk positions. Only CAD bucked the trend on the grounds that better US data bodes well for Canadian exports, and a less dovish Fed might open the door to an eventual hike from the Bank of Canada. The US Treasury curve by comparison was largely unaffected, but we question for how much longer this can continue. Whenever US yields do break significantly higher, we expect USDJPY to follow. Chicago PMI was firm at 64.0 and the second estimate of Q4 GDP was revised up slightly. EURCAD continues to look vulnerable under the twin influences of Bernanke’s testimony and yesterday’s ECB LTRO. Our European bank analysts expect the Spanish banks to have been the biggest liquidity takers. Overnight, EURUSD traded 1.3315-1.3363 and USDJPY 80.26-81.31. Today, an EU Summit gets underway and Fed Chairman Bernanke completes the second day of his Congressional testimony. A raft of PMI numbers are also due globally. With the exception of Eurozone aggregate manufacturing PMI, all key prints are expected to be above 50.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank