• China Foreign Ministry; Yuan reform must remain “controllable and gradual”
  • Spain’s EconMin Salgado: Confident in support of popular party for labour reform. Spain believes in European solidarity
  • German Ifo June business climate index 101.8, better than median forecast of 101.2
  • Ifo’s Abberger: Economic recovery is robust and intact
  • Greek Debt Agency head: Very optimistic Greece will come out ok from crisis. Can afford to concentrate on implementing fiscal consolidation measures. Can’t do much about extreme price action in bond market. Big challenge we have is about economic growth
  • Bk of Spain’s Ordonez: Regional governments long way from responding to necessary cut in spending. Calls for consensus in pension reform

Risk aversion has picked up again this morning, with JPY, USD and CHF the beneficiaries as usual. European stocks opened firmer but have sold off fairly aggresively throughout the morning, while oil is off around a buck.

Some point to rise in USD/CNY rate today as evidence China isn’t fully committed to revaluing their currency and this hasn’t helped matters.

Euro has also been hurt by US bank note suggesting there may be up to 16 yards of EUR/USD to be sold to convert USD/CNY positions into a basket trade.

EUR/USD is down at 1.2265 from early 1.2305 having been as low as 1.2259. The move comes despite better than expected Ifo data and bouts of sovereign buying. Talk of more stops now through 1.2240. On topside sell orders noted at 1.2350/60 stops just above there.

Cable at 1.4740 little easier from early 1.4760 ahead of todays budget statement. Hedge fund selling was been noted.

EUR/GBP at .8325 little changed on the day. The cross did rally to a session high .8368 at one juncture where it ran into good selling interest from Uk clearer.

USD/JPY down on day against backdrop of increased risk aversion, presently at 90.60 from early 90.95. Buy orders noted at 90.50 helping lend tenuous support so far. EUR/JPY down at 111.15 from early 111.85. Stops now seen through 110.95.

EUR/CHF down at 1.3625 from early 1.3653. Stops tripped when 1.3650 barrier interest gave out. Reports had major German name aggressive seller just above 1.3650.