New York Session

The USD fell to new lows for the year against most other currencies as the recent trend toward USD weakness accelerated. The immediate catalyst appeared to be concerns over the ability of the US to fund its massive borrowing needs, as USD selling intensified after the Treasury announced larger than expected debt issuance next week. That announcement came following a disappointing round of the Fed’s asset purchase plan (aka quantitative easing), which accepted only about 16% of the amount on offer, leaving many in a rush to exit long positions, and the news of larger supply next week added to the crush of sellers. US Treasuries plunged more than a point and yields ran up to new highs for the year at 3.37% in the 10-year note. Concerns over the US AAA rating were also voiced, coming on the heels of S&P warning on the potential for a downgrade to the UK’s credit rating. Interestingly enough, traders shrugged off S&P’s concern about the UK and GBP finished out on new highs against the USD. Stocks were sold throughout the day, but even nearly 2% declines could not lend the USD support, as the safe have appeal seems to have vanished. Full text »