- ECB buys Italian and Spanish govt bonds
- German govt spokesman: Not aware of any signals that Italian/Spanish bonds bought by ECB will be transferred to EFSF at later date
- Trichet wrote secret letter to Italian govt – Milan daily Corriere della Sera
- Union asks what steps ECB has demanded from Italy
- Britain, other euro zone countries face ratings cut – Jim Rogers
- Moody’s: Japan’s currency intervention is negative for sovereign rating. FX intervention not stopping yen rise, so has negative implications for Japan’s credit
- Italian banks’ July borrowing from ECB 80.49 bln, up sharply from previous 41.32 bln
- Swiss unadj unemployment rate 2.8% in July
- Euro zone sentix drops sharply to -13.5 in August from 5.3 in July, much weaker than median forecast of 3.4. Lowest read since September 2009
- We face recession without shock absorbers as Berlin loses patience with the euro zone - AEP at The Telegraph
- Picking fight with Bundesbank dangerous for ECB - David Marsh at Marketwatch
Choppy, nervy markets. Not overly surprising given all thats going on.
EUR/USD down at 1.4260 from early 1.4315. Inbetween we’ve been as high as 1.4401 and as low as 1.4240.
Euro rallied early underpinned by improving European stocks and reports ECB in buying Italian and Spanish government bonds. We got to 1.4400 area and ran into strong Eastern European selling which capped things.
Well known US investment house then waded in selling aggressively and we were quickly on our way toward 1.4300. Report ECB had sent a secret letter to the Italian government instructing them what measures they wanted to see and the fall out from that; very poor euro zone sentix data, comments from Jim Rogers re further euro zone downgrades; comments from German government spokesman that there isn’t going to be an increase in the size of the EFSF and news Italian banks sharply increased borrowing from ECB in July all weighed on the single currency.
ACB buying was noted on the way down and eventually buying by Korea around session low 1.4240 managed to tentatively arrest the slide.
USD/JPY down at 77.75 from early 78.05. Model funds have been notable sellers of EUR/JPY this morning (cross down at 110.90 from early 111.75) and this has weighed on USD/JPY. Market probing for signs of BOJ buy interest in USD/JPY, but so far no sign of it. Lots of official rhetoric though.
Comment from Moody’s that fx intervention not stopping yen rise will have weighed on USD/JPY.
Cable effectively unchanged around 1.6410. Decent “retail” sell orders seen clustered up at 1.6480/00.
AUD/USD up at 1.0370 from early 1.0330. ACB sovereign buying has been noted on a number of ocassions this morning.
