• BOJ Deputy Governor Yamaguchi: Japan not in deflation spiral
  • Iran’s Foreign Ministry says 5 of 9 detained local British embassy staff released – State Tv
  • EU Almunia: Various quarters of negative growth ahead for European economy. Europe will take longer to recover than U.S. Unemployment remaining high for some time.
  • Austrian PMI rises to 42.0 in June from 39.3 in May, but job cuts accelerate
  • UK May mortgage approvals +43,414 vs +43,191 in April, but much lower than median forecast of +46,000. Mortgage lending +£0.324 bln, much weaker than median forecast of +£1.1 bln
  • Euro zone June economic sentiment rises to 73.3 vs 70.2 in May, and much stronger than median forecast of 70.8
  • IEA says global gas demand likely to fall for first time in 50 years in 2009
  • IEA says “seriously concerned” that Russian gas flows to Europe across Ukraine could be cut almost at any time
  • Euro zone leading economic index for May up 1.9% at 95.4 from 93.6 in April -Conference Board

Risk appetite in pretty good shape. Likes of USD, JPY and CHF have given ground to likes of GBP, EUR, AUD and CAD, but it’s all pretty marginal stuff. The release of better than expected euro zone June economic sentiment data has helped underpin risk appetite.

EUR/USD started off around 1.4030 and ran into some fairly heavy selling and stops just below 1.4000 were triggered and a 1.3984 session low posted. A UK clearer (also seen in cable) was noted buying aggressively around the lows. We’re presently back up at 1.4050.

Cable had a real roller coaster ride this morning. Sold off sharply in early Europe, giving up about half a cent to post a 1.6429 session low. This was followed by a very sharp rally which saw the pairing shoot back over 1.6500.

Sources report that a large part of the rally was down to a UK clearer buying aggressively on behalf of a large corporate. There has also been talk that the buying was also related in part to demand for the month end fixings tomorrow.

The pairing was off it’s high around 1.6515 when the release of much weaker than expected UK May mortgage approvals sent the pairing scurrying back below 1.6500. It didn’t take long though for the pairing to rally back as European stockmarkets moved higher. We’re presently at 1.6540, just off 1.6548 session high.

USD/JPY has hardly budged, presently at 95.45. Sources report 95.35 option expiry around $500 mln for todays New York cut (14:00 GMT).