• Finnish Parliament votes in favour of participation in Portugal bailout
  • Slovak FinMin: Expects debate on some kind of soft restructuring of Greek debt – Reuters insider
  • Greece is optimistic it will get 5th tranche of bailout loan. Greece has no plan to hold a referendum on austerity measures – Govt spokesman
  • German Gfk June consumer sentiment inidicator falls to 5.5 from 5.7 in May, below median forecast of 5.6
  • UK Nationwide CEO; Does not expect UK interest rates to move until around November/end 2011. Sees UK interest rates at around 2.5% by end 2013
  • ECB’s Stark; Euro zone growth more broad-based and more sustainable
  • UK Q1 GDP (2nd read) +0.5% q/q, +1.8% y/y, as expected (had been early rumour in market of +0.4%, +1.7%)
  • German DIHK survey says raising 2011 GDP growth forecast to 3.5% from previous 3.0%
  • S&P: Ireland may have further quarters of negative growth, but bottom of the downturn has been reached

Risk off, risk on, risk off, risk on, risk off, risk on. It’s getting on my bloody nerves.

We started off this morning with risk off and things have slowly seen some inprovement as the morning has progressed. European stocks, oil have pared their losses, Gold, US treasury yields have firmed etc etc.

EUR/USD up at 1.4070 from early 1.4050. We initially went down to 1.4011 before rebounding as general sentiment improved. It was a choppy ascent though, when all said and done. A “smart” central bank stepped in selling at 1.4080+ and has managed to help cap the rally.

Buy stops now seen gathering just north of the 1.4107 Asian session high.

Cable up at 1.6230 from early 1.6170. The pairing initially came under some pressure, not helped by rumour the Q1 GDP data was going to come in slightly below median forecast. We stood around 1.6150/55 on release of the data and after a brief pause headed northward. Guess there was some relief data wasn’t worse than expected, plus the improving general risk sentiment.

EUR/GBP down marginally at .8665 from early .8680. Model funds notable sellers today.

USD/JPY up at 82.05 from early 81.95. We did see early dip to 81.75 before recovery. US treasury yields have firmed as risk sentiment has improved, and this has helped underpin the pairing.

Stops now seen through 82.25 and more through 82.60.

AUD/USD up very marginally at 1.0495 from early 1.0480. Middle Eastern sovereign buying was a notable feature this morning. On the flip side, real money and China (again) were seen selling. China was seen selling in 1.0480/90 area.

We had report a “smart” central bank was selling into the rally 1.0510+ (same one as seen selling EUR/USD), and they proved smart indeed as we then drifted slowly lower. Not sure who the “smart” one was. Maybe it was China again. They were smart enough yesterday when selling up at 1.0560+.