USD remained in favour in the London/NY overlap, with US July PPI even higher than expected. But US equity losses extended, ultimately pulling USD lower, about -0.7% from the NY morning highs. Financials came under renewed pressure, due to ex-IMF chief economist Rogoff's latest comments that the 'worst is yet to come' with bank failures and saying GSE equity holders 'should lose all their money.' A squeeze in oil also didn't help USD. In late trade, Lehmans sagged -13%, FRE -6%, MER and BoA -4%. Still, it wasn't all bad for the GSEs, as Freddie's $3bn 5yr bond issue went reasonably well.
AUD/USD chopped around 0.8640 to 0.8695 in London then squeezed a little higher in NY in sympathy with the euro. AUD/ NZD dipped as low as 1.2173 given the firm kiwi, steadying around 1.2210 in late NY. EUR/USD looked underwhelming in European trade, ranging from 1.4638 to 1.4710 before its short-covering squeeze sent it to 1.4790. USD/JPY was fairly soggy throughout London trade, slipping below 110.00 and showing little inclination to rally, given the DJIA opened 70pts lower and then slipped to -155pts before steadying. The New Zealand dollar tracked firmly higher, from its 0.7045 low in early London to as high as 0.7152 in the NY afternoon.
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