• Swiss trade surplus for July 2347 mln chf, better than median forecast of 1,800 bln
  • Shanghai share index up +4.52%
  • UK July retail sales +0.4% m/m, +3.3% y/y, stronger than median forecasts of +0.2%, +2.6% respectively. Strongest y/y rise since May 2008
  • UK July PSNB 8.016 bln, much worse than median forecast of 0.5 bln. Record deficit for a July. Tax revenues plummet in recession
  • UK m4 money supply (July-prov) +1.0% m/m, +13.6%, stronger than median forecasts of +0.2%, +13.3% respectively
  • BOE says major UK lenders approved 53,400 mortgages in July, vs 50,200 in June
  • Swiss ZEW investor sentiment +18.6 in August after flat in July
  • Early indicators show German GDP could see marked increase in Q-3 from Q2 – BUBA

If you wanted action this morning you had to be in cable and the sterling crosses, the rest was an absolute waste of time.

EUR/USD sits at 1.4225, effectively where it started out the day. Trading has been confined to a very narrow range. Russian buying has supported, while China selling has capped the upside.

China is reported to have yesteday bought a one month $1.3950/1.4450 dnt structure, so they’ll be doing their darndest to keep price action within those two parameters over the next month. Seeing them sell into the early EUR/USD rally this morning gave everyone a glimpse of things to come.

Cable started out so well. From an early 1.6525 is rose steadily, underpinned by decent general risk appetite, as global stocks performed well (Chinese stocks seeing a nice recovery today.)

The pairing peeked over 1.6600 and then it all went pear-shaped. The release of very poor public finance data (see above) certainly didn’t help, neither did aggressive selling from the BIS around the highs.

The swiss bank (or whoever it was dealing for) was probably more than happy to take a nice lumpy profit on the cable they scooped up below 1.6400 (around 1.6375) yesterday. Nice work if you can get it.

Buy orders down at 1.6500/10 lent support for a time, but they were swamped in late morning trade, triggering sell stops just below 1.6500. We’re down at a session low 1.6465 as i write this.

USD/JPY sits at 94.25, effectively unchanged. It might have moved, but if it did I missed it. Sources report Japanese sell orders lined up at 94.50 up through 95.00, and in EUR/JPY at 134.50 up through 134.80. The interest has helped curtail the marginal JPY weakness seen overnight in Asia.