• German FDP (Free Democrats, junior partner in coalition govt) budget expert says NO to Greek aid still possible if conditions are not met
  • German spokesman: CDU to bring up subject of haircuts on Greek debt in meeting with ECB, IMF in Berlin on Wednesday
  • Greek 5 year CDS swap rises to a new record high 718 bps
  • Shanghai stock index down 2.1%, lowest close in 6 1/2 months
  • SKorean FinMin: FX market expectations of won’s rise excessive. Authorities to take action when herd behaviour moves won sharply. Authorities said to have bought around $1.5 bln today alone to combat won strength
  • Spain Q1 2010 jobless rate reaches 20.05%, 4.61 mln unemployed – Newspaper report
  • German Gfk May consumer sentiment indicator 3.8 vs upwardly revised 3.4 in April, better than median forecast 3.3
  • German March import prices +1.7% m/m, +5.0%, stronger than median forecasts +1.1%, +4.2% respectively
  • French April consumer confidence -37, down from -34 in March and worse than median forecast -33
  • Italy April consumer confidence rises to 107.9 from 106.3 in March, better than median forecast of 106.6
  • UK mortgage approvals for home purchase 34,905 in March vs 33,360 in February
  • Around 5,000 French grain farmers take to streets of Paris to protest about prices

Risk off today, benefitting yen and dollar. European stocks have followed their Asian counterparts lower. OIl off 3/4’s of a buck, gold lower etc etc.

Worries surrounding PIGS in general, and Greece in particular, just keep growing. Germany continues to queer the pitch regarding Greek aid package. And now Merkel’s CDU seem to think it might be a good idea to make banks holding Greek government debt take a haircut. See above.

EUR/USD down at 1.3300 from early 1.3380, EUR/JPY down at 124.80 from early 125.55. The sell-off comes despite various bouts of sovereign buying. BIS seen buying around 1.3365. Asian sovereigns seen buying in 1.3330/50 area and sovereign labelled “top tier” seen around 1.3315. Stops next seen through 1.3280.

USD/JPY little changed at 93.90, recovering from session low 93.62 amid reports of Kampo buying “around 93.70.”

Cable has had a bad morning, down at 1.5330 from early 1.5450. Eastern European names were seen selling early. A Middle Eastern sovereign stepped in and slowed the decline for awhile buying around 1.5425/35 but it proved only a brief repreive.

Stops were tripped through 1.5410 accelerating the move lower. Buy orders lined up at 1.5360/80 then offered a brief reprieve before two clearers entered the market selling aggressively, taking out aforementioned interest, triggering stops below 1.5340 and sending us to session low 1.5321 from whence we’ve not seen any real recovery.

EUR/GBP firmer on day at .8678 from early .8658, but well documented sell orders around .8700 have so far capped rally at .8697.