Market Comments:
US Treasuries sold off heavily yesterday with the much better than expected Philly Fed and the falling continuing jobless claims numbers giving the optimists some hope while the market also eyes next weeks massive auction ($104 billion) of two, five and seven year US treasury notes. The auctions were announced yesterday. The heavy treasury selling and a gentle rally in stocks saw the the usual reaction in the FX market, with JPY crosses up sharply and the USD suddenly struggling back toward support. The ranges held rather well, however, with EURUSD finding a brick wall at 1.4000 once again before selling off all the way below 1.3900 late in the North American session. It appears the market is on tenter hooks ahead of next week's FOMC meeting, where it appears the Fed will need to send some kind of signal on its view of the market's rather bold prediction of late that the Fed could move on rates sooner than was previously expected. The market will also be curious how well it can absorb the treasury issuance blitz, as next week's auction size was likely increased after the success of recent well subscribed auctions.