• ECB’s Trichet says liquidity situation of Greek banks remains difficult and could deteriorate
  • Japan Ruling Party member says should intervene to weaken Yen – basically a re-run of the 120 USD/JPY story earlier this week
  • EZ CPI +0.9% m/m, +1.4% y/y; expected 1.5%
  • EZ trade surplus at 2.6bln vs -9.0 (revsd)
  • Greek PM says IMF participation in EU support deal due to insistence of some partners
  • Greek PM: Aid mechanism will be activated depending on Greek interests
  • German FinMin; no other EZ countries debt problems compare to Greek situation
  • EU Juncker says Greek letter to IMF, ECB and Commission reflects desire to respect IMF procedures
  • ER’s Rehn: Many EZ long-term budget deficit cutting plans based on optimistic scenarios
  • Oil down $1 on “risk off” move
  • Greek debt roadshow in doubt -Jiji news

[Theme] It was a “risk off ” session in Asia with the Nikkei down 1.5% and the Hang Seng down 1.3%. EUR/USD falls on more Greek tradegy stories – GBP/USD falls on election opinion swings – AUD/USD falls on general “risk off” move but finds solid buying support below 0.9300. USD/AXJ rallies initially on the “risk off” scenario but returns to trend moves late in the day.

Europe has been buffeted by comments – some new/some old – but it basically remains a Greece story. European stocks are down smalls with Wall Street expected to follow suit after Google disappoints whilst GE beats the streets estimate.

EUR/USD after closing in NY around 1.3570 has been heavy all day but despite the plethora of Greek comments (mostly negative) the pair has not been able to breach 1.3500 today. Reports are that Asian c/banks on the bid at the lows recycling US Dollars. Short covering rallies hard going whilst dips are sharp. Intraday range 1.3513-86; last at 1.3528.

USD/JPY was heavy in Asia after reported Toshin demand a lot less than expected. Pair ran into solid bids at 92.50 and was consolidating just above when the USD/JPY 120 story got another re-run in a Reuters interview with one of the lawmakers responsible for the “silly’ report. The pair rushed to 93.15 on the intervention headline but quickly eased back to 92.80. Intrday range 92.51-9315; last at 92.80. EUR/JPY after taking out big stops at 125.70 and again at 125.50 fell to 125.08 before bouncing savagely on the intervention headline.

GBP/USD got hit in early Sydney on the televised political debate. Generally thought that LibDem leader Clegg won the first debate (easily) but most concern withPM Brown taunting the conservatives that they will take away the stimulus – thus rating agencies worried that debt will not be reduced enough to stop a ratings downgrade. The selling intensified in early London (of course) but once a low was found the pair bounced hard. Intraday range 1.0560-1.5480; last at 1.5461.

AUD/USD was sold hard in Sydney by a large IB but ran into many option gamma bids around 0.9300 and just below. When the selling subsided the pair bounced quickly running into the 0.9330s before fresh selling interest pushed it back to 0.9315. Intraday range 0.9285-0.9344; last at 0.9317.

US Housing starts and building permits are slated for release at 1330GMT. The Michigan sentiment survey follows at 1455GMT.