The ECB Has Spoken, But Euro Falls Anyway - European Central Bank President Jean-Claude Trichet indicated that he would maintain the status quo of having the ECB buy distressed sovereign bond. The Euro sold off because he failed to indicate that the central bank would boost bond purchases. Speaking at his monthly news conference in Frankfurt, Trichet said the central bank would continue to sterilize bond purchases under the program. The market was looking for a numerical number and the ECB failed to give it to them. Up to that point, the Euro had its best rally of the last couple of weeks on hopes that the ECB would signal its determination to contain the crisis from spreading to other countries, such as Portugal and Spain. Yesterday the Euro received a boost after a U.S. official told Reuters Washington would support boosting an EU rescue facility via IMF funds, although a Treasury Department spokesman later said an "extra commitment is not something we're discussing right now". In Asia, the USD was little changed versus the Yen but the AUD was down versus the USD. In Australia, data showed retail sales unexpectedly declined and imports slumped to the least since February. In Canada, the CAD extended its gains for a second straight day as the risk trade continues. The key employment reports for Canada and the U.S. are tomorrow. This will be the last major data release to consider before the Bank of Canada's next interest rate decision on Dec. 7. The market has already discounted that the central bank will leave interest rates unchanged at 1%.
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