- ECB’s Stark: “Sovereign debt restructuring would undermine eligibility of Greek government bonds” Article in FTDeutschland re Trichet comments on same subject
- German govt source: ECB not accepting Greek bonds as collateral in event of restructuring has consistently been ECB’s position
- Conflicting reports regarding ECB buying periphery bonds this morning. Some say they did, some say they didn’t. Whatever
- Dutch FinMin: Cannot let Greece return to the drachma, it would not be able to pay back debt
- EFSF and EFSM to raise funds for Portugal and Ireland on market between May 23 and July 15
- UK April retail sales +1.1% m/m, +2.8% y/y, stronger than median forecasts +0.8%, +2.5% respectively
- UK CBI manufacturing order book balance rises to -2 from -11 in April, better than median forecast of -5
- Spain sells 2495 mln 2021 bonds, 724 mln 2041 bonds
- Swiss ZEW indicator sentiment -11.5 in May, sharply lower than +8.8 in April
Not too sure what to make of this mornings fare really.
EUR/USD sits at 1.4275, marginally easier from early 1.4295, but well off session low of 1.4204. The pairing was underminned early by story in FTDeutschland reporting Trichet comments, Stark and Dutch FinMin comments (see all above)
Stops were eventually tripped through 1.4230 accelerating the move. Then we saw a strong reversal. A German govt source came out and reminded the market that ECB not accepting govt bonds as collateral in event of restructuring has consistently been ECB position. That seemed to help. Then reports of ECB buying periphery bonds accelerated the recovery further with a large US hedge fund a notable buyer on the way up.
There has been some debate as to whether the ECB have infact been active. That sort of morning really, messy.
USD/JPY up at 81.85 from early 81.55, having been as high as 81.96. System funds notable buyers this morning. Talk of decent demand today for 1-month USD calls with 85.00 strike.
Also talk of 82.00 barrier option interest, which is being vigorously defended so far.
Cable sits at 1.6185, effectively unchanged on the day after an early sell-off which saw a session low of 1.6128 posted.
There were rumours of a weaker than expected retail sales report, which weighed on sterling in early trade. We were rebounding from the lows just before the release (around 1.6145/50) and the better than expected data saw sterling make decent gains. So much for market rumours.
Better than expected CBI data (see above) has lent further support in late morning trade.
USD/CHF up at .8835 from early .8770, EUR/CHF up at 1.2610 from around 1.2540. Release of much weaker than expected ZEW data (see above) has weighed a bit on swissy.
