- Dollar reaches breaking point as banks shift reserves - Bloomberg
- Thailand’s central bank signals it will intervene further to curb gains in baht and says it is diversifying its foreign reserves after weeks of buying US dollars. Indeed Asian sovereigns seen notable buyers down around 1.4680 in EUR/USD
- German September wholesales prices -0.2% m/m, -8.1% y/y, weaker than median forecasts of +0.3%, -7.7% respectively
- Shanghai share index ends down 0.6% on owrries of new share supplies
- UK PM Brown confirms £16 bln of assets to be sold over next two years. Ending QE programme now would “imperil recovery”
- Moody’s says stable outlook for UK sovereign debt reinforced by party conferences. Sees wide UK political and public consensus on need for spending cuts, fiscal consolidation
- Larry Summers: US is “on the path toward economic recovery”
Risk appetite is in good shape with European stocks and oil trading firmer. FTSE 100 is up just over 1%, DAX 30 up close to 1.5%. Meanwhile oil is up over a buck.
EUR/USD started around 1.4705 and initially came under some pressure. However the market was loathe to sell too aggressively for fear of running into renewed sovereign buy interest (Asian sovereigns having been seen buying around 1.4680 overnight.)
European stocks having opened a little firmer extended their rallies along with oil and this helped lift EUR/USD higher. The pairing got a further lift from bullish comments from Larry Summers (see above). We’ve been to 1.4771 where sell orders, including some from prop desks, are said to be lying. We’re presently off a touch at 1.4755.
Cable having started around 1.5845 came under pressure early, sterling in general underminned by a report by The Centre of Economics and Business Research. The think tank predicts rates remaining at 0.5% until 2011 and further QE with the programme of asset sales not starting to be rolled back until 2014 at the earliest.
Stops were triggered on move through 1.5800 and then again on move though 1.5770 bringing about a session low 1.5729. Elsewhere EUR/GBP saw accelerated gains as buy stops above .9300 (some say above .9310) were triggered bringing a session high .9350.
However a combination of improving risk appetite and encouraging comments from Moody’s regarding UK’s sovereign debt rating (see above) lent cable and sterling in general some much-needed support, cable presently back up around 1.5800.
USD/JPY managed to rally early, moving from around 90.10 to a session high 90.46 before running out of steam and we’re back where we began.
AUD/USD has made gains against the backdrop of improving risk appetite, presently up at .9060 from an early .9020. It hasn’t all been plain sailing though, the aussie bulls getting an early scare when heavy selling interest saw a session low .8984 posted. There had been talk of China on the bid at .9000. They probably just moved their bid and came in again around .8985, although haven’t got confirmation of such.
