- Italian March World trade surplus 82 mln euros. EU trade deficit 85 mln euros
- UK April CPI +0.2% m/m, +2.3% y/y. Weaker than expected vs median forecasts of +0.4% and +2.4% respectively. Lowest y/y rise since January 2008. Office of National Statistics says biggest downward factors on CPI y/y rate energy bills. food prices
- India State-run banks seen buying dollars from around 47.40 rupees- Dealers
- China says Chinese foreign financial assets totalled $2.9 trln at end of 2008, up 23%
- ZEW institute May German economic sentiment index 31.1 vs 13.0 in April. Much better than median forecast of 20.0. ZEW feels optimism is supported by modest signs of recovery in real economy. More and more signs indicate the worst seems to be over
- German FinMin Steinbruek: Medium-term inflation risk is more serious than short-term deflation risks
Risk sentiment in good shape, likes of sterling, euro, aussie and canadian dollar had good morning gains.
Cable started off around 1.5340 but soon leveraged and model names were seen buying aggressively. They initiated a breach of the 1.5374 January high, triggering large buy stops, and we were off to the races.
The rally ran into some decent sell interest up at 1.5430/50 which caused a stall, but it didn’t take long before buying resumed with gusto. We’re been up to test technical resistance at 1.5500, which has so far held. We’re presently at 1.5490. Cable bulls seem to be targeting 1.5555-85 area on this run.
Starting off around 1.3555, the euro grabbed a ride on cable’s coattails. Initially the rally in EUR/USD ran into decent sell interest at 1.3600, but this was eventually overcome and buy stops in 1.3600/10 area triggered. A much better than expected ZEW German economic sentiment index reading (see above) gave the euro an additional boost and a 1.3655 session high was posted. We’ve settled back, presently at 1.3635.
