• China fx regulator says will diversify among major currencies and high-quality assets, but country’s reserves are still anchored on U.S. dollar. Dollar status as main reserve currency will not change near-term. Will further improve yuan’s managed float
  • UK John Lewis department store sales up very hefty 22.4% y/y in week to Nov 28
  • Swiss November CPI +0.2% m/m, flat y/y, stronger vs median forecasts of flat, -0.2% respectively
  • UK November new car registrations +57.6 y/y, helped in no small part by scrappage scheme
  • UK ONS says Q3 construction output rise could add 0.2% to Q3 GDP, other things being equal. Construction output has been hugely revised t0 +2.0% in Q3 vs Q2, from initial -1.1% contraction published in last weeks second reading of Q3 GDP
  • Bundesbank: German real GDP -4.9% in 2009, +1.6% in 2010 and +1.2 in 2011
  • Canadian November net change in empoyment +75k, much better than median forecast +15k. Unemployment rate 8.5% vs median forecast 8.6%

Sterling strength main feature this morning, cable up at 1.6660 from early 1.6530, while EUR/GBP is down at .9045 from around .9105.

Cable rallied right from the get go with sources reporting strong buying from two U.S. names. The pairing continued to climb as talk circulated that there was good sterling demand lined up for the 11:00 GMT fix. Not sure what this was related to, maybe to Barclays/Blackrock deal, but only quessing.

Sterling also got some good support from the release of very strong John Lewis sales (see above) and then more markedly from upwardly revised Q3 construction output data. Output rose 2.0% in Q3 vs Q2, from an initial estimate of a 1.1% decline published in last weeks second reading of Q3 GDP.

The ONS says the construction output revision could add 0.2% to Q3 GDP other things being equal.

EUR/USD sits at 1.5070 marginally firmer from an early 1.5050. Russia came in early buying good amounts and that helped lift the pairing to a session high 1.5091 before topping out and gradually sliding back.

Early comments from a Chinese official (see above) reiterating that China will diversify among major currencies and high-quality assets probably didn’t help the greenback’s cause any in early trade, but talk of good sell orders lined up at 1.5100/10, including apparently ACB interest, will have helped negate accelerated USD losses as we await US jobs data.

USD/JPY is marginally firmer, but its been sluggish trade. We’re up at 88.40 from an early 88.20 with sources noting good buying interest from a Middle Eastern sovereign. Sell orders now seen at 88.50/60, with stops just above there.