• Yen too strong for Japan economy now – Opposition finance spokesman
  • BOJ chief economist: Good chance Japan real GDP may turn positive in April-June
  • German May final CPI confirmed at -0.1% m/m flat y/y
  • French April industry output -1.4% m/m, much weaker than median forecast of -0.2%
  • French FinMin source: No plans for fx rate discussion at Lecce G8 as no CBankers attending
  • Italian April industry output s.a +1.1% m/m, vs -4.5% in March, stronger than median forecast of +0.5% and first rise after 11 consecutive monthly falls
  • UK April industrial output +0.3% m/m, -12.3% y/y, better than median forecasts of -0.1%, -12.4% respectively
  • UK April visible trade deficit -£7.003 bln, worse than median forecast of -£6.4 bln
  • Italian Q-1 GDP revised down to -2.6% q/q, -6.0% y/y from initial -2.4%, -5.9% respectively
  • Fitch says “significant and rising risk” of currency devaluation in Latvia
  • BOE’s Barker: We think rates could stay low for some time. Important question is whether pick up can be sustained to autumn

Another busy morning. Risk appetite is in good shape, stocks commodities etc up, with likes of sterling, aussie, canadian dollar, and to slightly lesser extent euro, benefitting. S&P futures up close to 14 points at writing.

EUR/USD started out around 1.4070 and saw accelerated gains when stops above 1.4100 were triggered, reaching a session high 1.4144. China and Bank of Korea were reported aggressive buyers early. That said, Bank of Korea has been seen on both sides of the market today. Sources report sell orders up at 1.4150/70 and proximity of these will have helped cap rally. We’re presently back at 1.4090. Negative comments from Fitch regarding Latvia’s chances of avoiding a lat devaluation will have also weighed a little.

Cable started around 1.6310 and soared higher to a session high 1.6442, underpinned by general risk appetite, recent improved UK housing data, survival of PM Brown, growing hopes of an early UK economic recovery and ongoing talk of positive M&A flows.

Cable was already down below 1.6400 when comments from BOE’s Baker hit the wires sending the pairing into a bit of a swoon. The official opinied that UK rates could stay low for some time and it is still not clear whether pick up in economy will prove durable. We’re presently at 1.6380, up on the day, but a fairways from session high.

AUD/USD is up at .8115 from an early .8045. Aussie is being underpinned by risk appetite, rising commodities, and overnight release of impressive consumer confidence data. Sources report that China was an aggressive buyer of the pairing today.

Interesting that it looks like friday’s release of Chinese industrial output data for May has been leaked. Reports say it may have hit 8.9%, up from 7.3% in April.