European Morning Wrap Up; Risk aversion picks up, SNB intervenes; USD firmer

• Swiss National Bank intervenes to stop accelerated swiss franc gains. Said to have bought USD/CHF on EBS at .9960. Amounts not large. Traders report SNB didn’t ring banks direct. Talk also bought EUR/CHF. SNB declines to comment (Was later noted in just under 1.0000)
• Shanghai share index down 3.6%, biggest one day drop in nearly 3 months
• Japan government spokesman Hirano: Watching forex moves carefully. Discussed yen rise with FinMin Fujii
• Japan FinMin Fujii: Won’t comment on chance of joint forex intervention. Will respond to abnormal fx moves as needed 
• Japan PM Hatoyama: Rapid currency moves not desirable.  Recent moves due to dollar weakness rather than yen strength.  Natural for FinMin to consider steps on currencies
• Italy November business confidence rises to 78.8 from 77.4 in October, better than median forecast of 77.5. Highest level since September 2008
• Euro zone October M3 annual growth +0.3%, weaker than median forecast of +0.8%
• ECB’s Weber: Monetary and fiscal stimulus measures should not be increased
• UK CBI retail sales balance +13 in November vs +8 in October, in line with median forecast of +13, highest since November 2007

Risk aversion has picked up with European stocks getting hit, FTSE 100 and DAX 30 down close to 2% (last I looked both around 1.8% underwater), while oil is off close to a buck.  The main driving force behind this latest bout of jitters is the problems out in Dubai. The government there is seeking a six month “standstill” on government-owned Dubai World, Nakheel debts with all lenders.

EUR/USD having opened around 1.5105 is presently down at 1.5070, having been as low as 1.5053.  Russian buying around the lows has helped lend much-needed support.  Talk of stops on move through 1.5040.

Cable and sterling in general got hit hard this morning, undermined by talk of UK banks (one in particular according to market rumour) having large exposure to troubled Dubai.  Cable sits at 1.6545, down from early 1.6670, having been as low as 1.6501.  EUR/GBP is up at .9105 from an early .9060.

USD/CHF firmer, up at 1.0005 from early .9955. Sources report the SNB came in and bought USD/CHF around .9960 over EBS this morning. Talk also that the bank bought EUR/CHF, but levels not mentioned. 

USD/JPY has managed a partial recovery, presently at 86.70 from early 86.50. A decent early rally failed to get back through 87.11, which was seen as important support on way down and now forms fairly important resistance. Lots and lots of verbal intervention from the Japanese authorities (sample above), but few traders are taking much notice.

AUD/USD lower, down at .9170 from early .9225, increased risk aversion weighing. Also talk of RBA selling close to .9322 overnight  high not helping