• Shanghai share index up hefty 4.8%, as China Securities Regulatory Commission (CSRC) Vice Chairman Liu Xinhua says regulator would do it’s best to promote the steady development of the country’s equity market
  • Euro zone final August services PMI 49.9, up from flash 49.5 and up from 45.7 in July. Highest read since May 2008
  • Strong yen is basically good for Japan economy. Current yen rise reflects weak dollar. Must not intervene in forex markets unless currencies move abnormally. No need to change Japan’s forex reserves policy for now. Must not resort to currency dumping. -Senior Japan Lawmaker
  • Spanish consumer confidence 79.5 in August, up from 76.1 in July
  • UK August services PMI 54.1, up from 53.2 in July, fractionally better than median forecast of 54.0. Highest read since September 2007
  • Italian, German employer groups tell EU worrying signs of credit crunch. H2 outlook not reassuring
  • Euro zone July retail sales -0.2% m/m, -1.8% y/y vs median forecasts of +0.1%, -2.2% respectively

Chinese stocks had a very good day (see above), and this set up the European morning to be a risk on morning. The release of good European PMI data (see above) has also helped support risk appetite.

Interesting article here. Not sure how much it impacted the markets, but scary headline if you’re a USD bull. It seems to be taking a little time to download now. Site probably getting rather higher readership than normal. You also have to schroll down rather a bit to get to story.

EUR/USD having started around 1.4275 is up at 1.4305, having been as high as 1.4314. The BIS is reported to have stepped in selling around the session high and this has served so far to cap the rally.

GBP/USD has had a good morning, presently up at 1.6385 from an early 1.6270. The rally accelerated when stops just above 1.6300 were triggered. As is usually the case, sterling is out-performing on a “risk on” day. So far sell orders just below 1.6400 are just about managing to cap the topside.

USD/JPY at 92.40 is marginally firmer on the day, but not soe’s you’d really notice. The pairing did rally to a session high 92.57 against the backdrop of improving risk sentiment, before falling back.

Plethora of comments from senior ruling party lawmaker (see above) had little or no impact, being very much standard fare.