• Bank of England keeps bank rate, QE steady at 0.5%, £200 bln respectively. As expected
  • ECB keeps rates steady at 1.0%, as expected
  • Moody’s places Cyprus Aa3 rating on review for possible downgrade
  • Japan PM Kan: To reshuffle cabinet on Friday
  • EU ministers discuss lowering Irish bailout interest rate – Irish Times
  • S&P: Sees 40% probablility of Greece defaulting on debt. Lagging competitiveness in periphery is threat to euro zone US fiscal position has deteriorated in past 6 months
  • Moody’s: US medium-term deficit, debt ratios worsening
  • Moody’s: Lower growth and weaker fiscal cuts could hurt UK rating
  • French December EU harmonised CPI +0.5% m/m, +2.0% y/y, marginally firmer than median forecasts of +0.4% m/m, +1.9% y/y
  • Belgian PM Leterme: Will do whatever it takes to defend euro
  • German December wholesale prices +1.8% m/m, +9.5% y/y
  • UK November industrial production +0.4% m/m, +3.3% y/y. Lowest y/y rate since July
  • France’s Sarkozy: Euro dollar exchange rate still too high

Good morning for the euro, which has seen across the board strength. EUR/USD up at 1.32005 from early 1.3105. It’s not been oneway traffic by any means, rather a choppy ascent. Major Swiss bank was an aggressive buyer very early as EUR/CHF rallied hard. We eventually got to 1.3170 where strong selling from China and Russia put in a temporary top.

Then in very late morning trade we were on the march higher again and ongoing selling from China above 1.3170 and BIS around 1.3200 hasn’t so far pushed back the tide.

EUR/JPY up at 109.45 from early 108.85. US investment house has been very notable buyer of the pairing all morning.

USD/CHF up at .9710 from early .9690, but someway from .9766 high. The same US investment house seen buying EUR/JPY was aggressive seller of USD/CHF around the highs.

Cable up at 1.5790 from early 1.5745, but so far sell orders around 1.5800 just about capping. Buy stops just above there.

USD/JPY marginally lower at 82.95 from early 83.05 in anemic trade. Tokyo names sold the pairing, pushing it below 83.00 only to run into sovereign buy interest at 82.90.