• Swiss Sept trade balance +1918 mln chf, up from +1718 in August
  • Russia central bank moves intervention level to 35.55 after buying $700 mln – Dealers
  • ECB’s Weber: Double dip recession very unlikely in euro zone, outlook fairly benign
  • French Oct business morale 89.0, up from revised 86 in Sept, better than median forecast of 87, highest since Oct 2008
  • Shanghai share index ends down 0.6%
  • Swedish central bank leaves rates unchanged at 0.25%
  • BOE’s Tucker: Would be possible to increase QE if necessary
  • Italy August retail sales -0.1% m/m, -2.9% y/y, weaker than median forcasts of +0.1%, -1.7% respectively
  • Euro zone s.a Aug current account defcit -1.3 bln euros from +3.7 bln surplus in July
  • UK Sept retail sales unchanged m/m, +2.4% y/y, weaker than median forecasts of +0.5%, +2.8% respectively

What a difference a day makes. Sterling the star yesterday has been on the defensive today. Cable is down at 1.6520 from an early 1.6600, while EUR/GBP is up at .9055 from around .9025.

Overnight talk of strong sell interest in cable lined up at 1.6630 up through 1.6660 from sovereigns and middle eastern players didn’t really bode well. The pairing rallied to begin with but was soon on the defensive.

The pairing had already slipped beneath 1.6600 when comments from BOE’s Paul Tucker hit the wires, the MPC member saying it would be possible to increase QE if necessary. That triggered stops in the 1.6565/70 area and we fell to a session low 1.6538.

Cable was recovering, sitting around 1.6560, when much worse than expected September retail sales data (see above) came out and we fell quIckly to a new session low of 1.6489.

Talk of an Asian sovereign buying below 1.6500 lent some support and we’re presently back up at 1.6520.

A large swiss bank meanwhile came out with a GBP/CHF sell recommendation. Entry level 1.6730, close stop at 1.6800, target 1.6000. The bank’s economists apparently expect the BOE to extend QE next month. We sit presently at 1.6700 in the cross.

EUR/USD came under early pressure. The BIS was seen selling up around 1.5000 and that set the tone. We finally reached a session low of 1.4944, with buy orders seen at 1.4940/60 just about holding the line. These orders included Asian sovereign interest. We’re presently back up at 1.4970. Sell stops seen on move through 1.4940. Barrier options up at 1.5050 and again at 1.5100.

USD/JPY started around 91.15 and rallied early with non-Japanese hedge funds seen decent buyers. We reached a session high 91.58 before slipping back, presently at 91.30. Talk of Japanese exporter sell interest up at 91.70/80.

AUD/USD steady, presently at .9225, pretty much where we came. Inbetween a sell-off below .9200 was met by Asian sovereign buying interest. These chaps seem to have had a pretty busy old morning.