• Sweden’s Riksbank cuts key repo rate to 1% from 2%. The 1% cut was more aggressive than expected.
• UK January jobless claims +73,800, better than expected consensus forecast of +90,000. Cable and sterling crosses rallied off the data.
• Bank of England sees CPI at 0.5% in 2 years time, assuming market rates and risks moderately to downside. Bank sees GDP falling by 4% in early 2009.
• BOE’s King says UK in deep recession. Further easing in monetary policy may well be required. Likely to require money supply boosting measures. Bank will be moving to buy a range of assets, almost certainly include gilts.
• Pretty active morning, especially for cable and the sterling crosses. The pound ralllied nicely off the back of the better than expected jobless claims, only to sell-off aggressively on the release of the latest Bank of England inflation report and subsequent comments made by BOE Govenor King at his press conference. Quite alot of central bank activity in evidence today. Eastern European central bank seen buying EUR/USD in low 1.29’s and Asian central bank seen selling above 1.2970. Different Asian central bank seen buying cable in early morning trade down in low 1.44’s. BIS seen selling EUR/GBP around .9010. Talk it was on behalf of Middle Eastern sovereign name.