• Asian Development Bank raises forecast for Asia growth minus Japan to 3.9% from previous 3.4%. Sees growth in 2010 maybe as high as 6.4%. Helps risk appetite
  • Swiss government raises 2009 GDP forecast to -1.7% from previous -2.7%. Raises 2010 forecast to +0.4% from previous -0.4%. Sees CPI falling -0.4% in 2009, rising +0.9% in 2010
  • Swiss trade surplus narrows to +1785 mln chf in August from revised +2209 in July.
  • Shanghai share index down -2.3% at 2-week closing low
  • ECB’s Weber: Behaviour of the forex markets is not out of line with stronger data coming from the eurozone compared to some other regions
  • Italy Q-2 unemployment rate s.a. 7.4% from Q-1 7.3%. Highest since Q-4 2005, but better than median forecast of 7.7%

USD has seen across the board weakness again this morning. Hasn’t been helped by speculation G20 might try and reduce global trade imbalances by manipulating currency levels. Good luck.

Also pressuring USD is ongoing strong risk appetite. Asia Development Bank overnight released bullish Asia growth forecasts (see above) and this gave general sentiment a filip. European stocks firmer (FTSE 100 up 0.9%, DAX 30 up 1.3%), with oil putting on about a buck.

EUR/USD started around 1.4715 and was soon ticking higher. The pairing then ran into something of a brickwall in the guise of a Swiss bank out of Zurich (known to act on behalf of high net-worth individuals.) The bank is said to have sold decent amounts around 1.4745.

There was a slight retracement lower but it didn’t last long. The euro bulls weren’t to be denied and soon well-touted stops just above 1.4770 were triggered. That took us quickly to test various option interest up at 1.4800.

We then had the usual pause while battle commenced just shy of the option level, and then we had the usual result as the option interest was blown out of the water. This triggered stops just above and we saw acclerated gains to a session high 1.4821, where a large German bank is said to have sold decent amounts. Might have been connected with touted 1.4825 digital option interest. We’ve presently drifted back to 1.4795.

ECB’s Weber suggested in comments (see above) that European Central Bank remains unconcerned by recent euro gains.

Cable up a full cent on the day, presently at 1.6335. The pairing benefitted from same factors as EUR/USD minus Weber. Some hesitation around 1.6300 where there was talk of Asian central bank selling interest. But eventually stops just above 1.6300 were found and triggered taking us quickly to a session high 1.6350. Cable was given a lift from a EUR/GBP sell recommendation. Sell interest noted up at 1.6400.

A well-respected US bank has recommended selling EUR/GBP at .9080 with a target of .8400, stop loss on close above .9250. EUR/GBP started around .9060, traded as high as .9081 and is presently back at .9060.

USD/JPY is a little easier on the day. Having started around 91.75, the USD bears were soon chewing through touted buy orders at 91.50/60, enabling them to trigger stops just below 91.50. We quickly made a sesion low 91.14 before gradual recovery back up to 91.40 at writing.