• Italy treasury says good demand at BTP auction. Italy raises 7.5 bln at bond auction vs target range of 5-8 bln. (pays up for funds though)
  • S&P may give France negative outlook – La Tribune
  • American airlines files for bankruptcy – Bloomberg TV
  • German FinMin: ECB doesn’t contribute to public finances. ECB monetary financing doesn’t comply with treaty, central banks’ role. All of euro zone infected by crisis contagion
  • EU document for Finance Ministers: There are serious concerns about possible inappropriate deleveraging by banks while strengthening their capital
  • ECB drains 194.2 bln in 1-week deposit auction, missing target of 203.5 bln
  • UK Nationwide house prices +0.4% m/m, +1.6% y/y in November, better than Reuters’ median forecasts flat, +1.3% respectively
  • UK October mortgage approvals 52,743, up from 51,193 in September and better than Reuters’ median forecast of 51,500. Highest since December 2009
  • UK October mortgage lending 1.288 bln vs 0.481 bln in September, much stronger than Reuters’ median forecast of 0.45 bln
  • Swiss UBS consumption indicator 0.91 in October, up from revised 0.82 in September (prev 0.84)
  • Euro zone economic sentiment falls to 93.7 in November from 94.8 in October, weaker than Reuters’ median forecast of 94.0
  • German exporters assoc: Sees 2011 exports up 12% to record level of 1,075 bln
  • French Budget Minister: Must reach budget equilibrium by 2016
  • German FinMin: 60% GDP debt plan would boost trust in euro zone
  • European nations pressure own banks for loans – WSJ

Nasty market, exceedingly choppy and volatile.

EUR/USD sits at 1.3355 presently, hardly changed from around 1.3365 when I first sat down this morning. Inbetween it’s been bedlam.

First a sell-off into 1.33 teens, the single currency unnerved by report in La Tribune that S&P may be about to give France a negative outlook. Real money and Russia notable sellers.

Major Canadian commerical bank then entered the market as notable buyer and the EUR/USD crept back up to the 1.3330/40 area. All calm for awhile before wham bang we spiked higher as rumours circulated of a “good” Italian auction.” Good in terms of the fact they raised a hefty 7.5 bln, although the prices paid disturbingly high

We spiked quickly above 1.3400, tripping stops through 1.3400 and 1.3415 reaching session high 1.3442. That’s where hedge funds entered the market and clumped the pairing back lower. Trailing sell stops in the 1.3365/70 area were duly tripped accelerating the reversal.

Among reasons for sharp sell off; ECB failing to drain full amount in its weekly term deposit facility (raising doubts about the banks’ ability to continue sterilizing sovereign bond purchases), comments from German FinMin regarding ECB’s role and news American Airlines has filed for bankkruptcy (risk off reaction)

All in all, a session not for the faint-hearted.