• ECB’s Liikanen: ECB has not decided that interest rates at the moment are the lowest possible. Not the policy of the ECB to set a floor for interest rates
  • French consumer confidence rises in May to -40 from unrevised -41 in April, as expected
  • French business morale rises to 72 in May from unrevised 71 in April, slightly below median forecast of 73
  • Swedish consumer confidence -11 in May, better than median forecast of -18
  • Italian consumer confidence unchanged in May from 104.9 in April, below median forecast of 105.2
  • Russia: Taking preventative measures, including military ones, after North Korea nuclear test – Interfax quotes security source
  • PBOC: China’s economic recovery not yet assured. Still faces quite serious downward pressure
  • ECB’s Noyer: Stress tests in France show no need to consolidate capital bases of banks. Tests show banks sound. Believes everyone ready for European stress test
  • ECB’s Bini Smaghi: China must let currency fluctuate, avoid accumulating reserves
  • ECB’s Constancio: Indicators are still very negative. Euro zone growth will be negative this year
  • Irish FinMin Lenihan: Ireland to spend 4% of GDP this year to “sort out banks”
  • Moody’s: Changes outlook for Italian banks to negative from stable

Risk appetite remains in pretty good shape. Sterling gains a main feature. Cable bulls had little trouble in taking out barrier option interest at 1.6000 and then 1.6025. Unconfirmed talk now of barrier option interest at 1.6050.

Cable got additional lift when fairly important technical support in EUR/GBP at .8723 gave out, leading to accelerated losses in the cross, presently down at .8700.

EUR/USD at 1.3950 pretty much where we came in. Euro has been underminned a little by comments made by ECB’s Liikanen. He told Finnish business daily Kauppalehti that the ECB has neither ruled out further interest rate cuts nor set a floor for rates.

Moody’s move to downgrade outlook for Italian banks from stable to negative has also weighed a little. There is also talk of China interest to sell above 1.4000, which is helping negate a meaningful rally.

USD/JPY very maginally easier, but ostensibly narrow range bound. Presently at 95.20, sell interest noted at 95.50.