• Ifo April German business climate index 109.9, stronger than Reuter’s median forecast 109.5
  • UK March retail sales inc auto fuel +1.8% m/m, +3.3% y/y, much stronger than median forecasts +0.5%, +1.5% respectively
  • John Lewis weekly department store sales up hefty 13.9%
  • Sarkozy: Euro implosion risk doesn’t exist anymore
  • Hollande: Without economic growth will miss deficit targets
  • Portugal FinMin Gasper: Portugal committed to rescue, terms won’t be erased
  • German March PPI +0.6% m/m, +3.3% y/y, little stronger than median forecasts +0.5%, +3.1% respectively
  • Dutch April consumer confidence -32 pts, improved from -39 pts in March
  • ECB’s Knot says there is a flight to quality – Telegraff
  • German tempers boil over back-door euro rescues – AEP at The Telegraph

European stocks, oil, US treasury yields all slightly firmer, reflecting mild risk on environemnt this morning. The release of better than expected German Ifo, and much better than expected UK retail sales data, has helped sentiment.

EUR/USD up at 1.3070 from early 1.3145 having been as high as 1.3180. We rallied early to circa 1.3163 before running into Russian selling. Then as periphery/German govt bond yield spreads widened, so the single currency came under pressure.

We slipped to circa 1.3130 before rebounding. ACB buying was seen around the lows. As the periphery/German govt bond spreads steadied, and European stocks crept higher, so EUR/USD recovered it’s poise. Eventually better than expected Ifo data gave a push to session high 1.3180 where sovereign sell interest was noted.

Talk now of trailing sell stops through 1.3125, buy stops through 1.3180 and more through 1.3200/1.3205 (take your pick, talk of interest through both levels) Has to be noted 1.3205 is the 55 dma.

Cable up at 1.6095 from early 1.6060 having spiked as high as 1.6117 (EBS) in wake of much stronger than expected UK retail sales. Perma cable bears like my goodself are getting killed.

USD/JPY up at 81.75 from early 81.55, EUR/JPY up at 107.65 from early 107.25, both underpinned by risk appetite. US treasury yields are firmer, supporting USD/JPY, benchmark 10 year yield up at 1.9840 from 1.9647 first thing.