• U.S.’s Gregson: U.S. goal is to maintain cooperative, cordial relationship with China. U.S. fully intends to meet obligations to ensure Taiwan’s self-defence capabilities
  • White House see FY 2010 budget deficit of $1.556 trln (pv forecast $1.502) FY 2011 $1.267 trln, 2012 $828 bln, 2013 $727 bln, 2014 $706 bln, 2015 $752 bln
  • BOJ chief economist: May need to wait till 2011/12 for full pick up in consumption. BOJ to stick to monetary easing to beat deflation
  • Shanghai share index ends down 1.6% at 3 1/2 month closing low
  • China CBank advisor Fan: Inflation pressure, asset bubble worrying. Excessive liquidity needs to be addressed as a problem
  • Swiss January PMI 56.0, better than expected 55.2
  • Euro zone January manufacturing PMI (final) revised up to 52.4 from flash 52.0. 2-year high
  • UK January manufacturing PMI 56.7, up from revised 54.6 in December and better than median forecast of 54.0. Highest read since October 1994
  • UK December mortgage approvals 59,023, down from 60,045 in in November and below median forecast of 62,000. Mortgage lending +£1.165 bln, below median forecast +£1.55 bln
  • EU’s Almunia: Greece deficit-cutting plan ambitious, but achieveable. Will give Greece until end 2012 to bring budget deficit below 3% of GDP

Sterling weakness is the main feature of this mornings trade. Apart from that it’s been pretty lacklustre fare.

Cable down at 1.5880 from early 1.5950 having been as low as 1.5851 at one stage, while EUR/GBP is up at ..8750 from start just south of .8700.

There have been reports of a UK clearer with strong interest to buy EUR/GBP at the fixes this morning. There is now talk of buy interest lined up for the 13;15 GMT fix. Word has it the interest is related to UK payment to EU for defence budget with amount of 2.5 bln euros being bandied about.

Cable saw decent demand emerge down at 1.5900/10 and it took a number of attempts before the GBP bears managed a breech. Stops through 1.5890 were quickly tripped and 1.5850 tested. As we tend to find the 50 level in cable has a habit of providing support/resistance along with the figure.

EUR/USD is up about 20 pips at 1.3900. Overnight, Asian sovereign buy interest emerged just ahead of 1.3850 (1.3854 low), which is said to hold barrier option interest. This morning an Asian sovereign was seen selling up around 1.3900 but amounts were reported not large. For good measure we also had BIS buying down around 1.3880/85.

There was talk early of sell orders up at 1.3910/20 and that interest has so far capped the topside, the session high 1.3916.

USD/JPY up fractionally, but not soe’s you’d really notice, presently at 90.25. Sell orders touted up at 90.50/60 with an early rally running out of steam up at 90.47.