- Egypt’s ElBaradei: Calls on Mubarak to quit in order to spare bloodshed
- South and North Korea agree to hold preliminary military talks Feb 8 -Yonhap
- IMF’s Strauss Kahn: “Pre-crisis pattern of global imbalances is re-emerging”
- Euro zone January manufacturing PMI (final) 57.3, revised up from flash estimate of 56.9 and up from 57.1 in December. Highest read since last April
- German January s.a jobless change -13k, slightly better than median forecast -10k. Unemployment rate improves to 7.4% from 7.5% in December
- UK January house prices -0.1% m/m, -1.1% y/y compared to median forecasts -0.4%, -1.0% respectively – Nationwide
- UK January manufacturing PMI 62.0, up from revised 58.7 in December, demonstrably stronger than median forecast of 57.9. Highest read since survey began in 1992 (data resulted in cable spiking over 1.6100 to session high 1.6141)
- UK December mortgage approvals 42,563 vs 47,287 in November, some way worse than median forecast of 47,000
- China’s Wen: Will firmly prevent excessive price rises
Dollar has generally seen some slight slippage this morning. EUR/USD up at 1.3750 from early 1.3730, having been as high as 1.3776 at one stage. Marked narrowing of periphery/German government bond yield spreads has helped underpin EUR/USD this morning.
Pairing rallied early. Talk had decent-sized sell orders lined up at 1.3760, and so it proved. We got to 1.3758 and down we went as various Asian central banks sold.
Then just ahead of 1.3700 reports came in of Asian central bank buying, and talk emerged that the central banks were content to play 1.3700-1.3760 range. And so it seemed. We rallied back up to 1.3750, where Asian central bank selling was duly reported.
Seemed like a very profitable little game, that is until a Middle Eastern sovereign stepped in and bought aggresively. This action tripped stops just above 1.3760 and we quickly got to 1.3776 before drifting lower again.
Talk now of stops through 1.3780 and 1.3785 (take your pick) and large through 1.3825.
Cable up at 1.6105 from early 1.6075. The release of much stronger than expected manufacturing PMI data (see above) saw cable spike above 1.6100 on way to session high 1.6141. Selling by UK clearer at the highs helped cap the ascent.
USD/JPY slightly lower on day at 81.65 from early 81.85. So far buying around 81.50 has helped lend tenuous support.
USD/CHF unchanged at .9410. Market seems little wary of running into Swiss National Bank buying below .9400.
