• Iran releases 5 Britons detained from yacht -State radio
  • S.Korea fx authorities buy dollars to curb won’s strength – Traders report
  • German EconMin Bruederle: Govt could take regulatory measures if banks do not lend more
  • Shanghai share index up 1.1%
  • Japanese PM Hatoyama: Yen’s rise cannot be left “as is.” Not sure whether yen’s strength is temporary – Nikkei
  • Japan Govt spokesman Hirano: PM Hatoyama likely means he is watching forex moves closely, not commenting on forex intervention
  • Spains November jobless up 1.6% vs October, up 60,593 vs 98,906 rise in October
  • BOE’s Dale: UK economy appears to have turned, helped by stimulus, sterling, but headwinds exist
  • Dubai World lenders form committee of four UK banks, two UAE banks. To meet company next week
  • UK November construction PMI index +47.0, in line with median forecast of +46.9
  • BOJ Shirakawa: Met with PM and talked about forex, current ecomomic situation
  • Euro zone October PPI +0.2% m/m, -6.7% y/y, stronger than median forecasts flat, -6.8% respectively
  • IMF’s Belka says euro on the strong side vs dollar. Carry trades boost euro, Brasilian real and Russian rouble. Chniese yuan is undervalued. Yuan appreciation important for fixing global imbalances

Sterling strength has been the main feature with cable up at 1.6690 from an early 1.6600, while EUR/GBP is down at .9040 from around .9090.

It didn’t start out too well however, cable selling off aggressively in early trade, underminned by decent ACB selling. China had been notable seller yesterday and was in early today selling. Technical support at 1.6550 held (low 1.6551) and cable and sterling in general were soon on the mend. Cable rally accelerated when stops above 1.6650 triggered.

The big plus for sterling this morning has been reports of large EUR/GBP sell interest scheduled for todays 13:15 GMT ECB fix. We had reports of fix sell interest yesterday and reports have it that E2 bln was done Tuesday. The talk has been that a similar amount needs to be done today. Vague talk interest is linked to a Thursday option expiry.

EUR/USD got hit hard early with an ACB notable seller. We went from around 1.5095 to a session low 1.5066 before slowly recovering. Sell orders up at 1.5110 have so far capped the resultant rally. Talk of stops on move through 1.5120 with sell orders then touted from 1.5125 up through to well-touted 1.5150 barrier option interest.

USD/JPY sits at 87.15 marginally firmer from an early 87.00 in lacklustre trade. Japanese officials continue to spout (see above) Just gets more amusing by the day. Chances of official Japanese intervention to turn round USD/JPY has to be remote.