• Merkel: There are broad-based attacks on euro. Unprecedented package of measures to protect euro. We must address root of the problem, that means consolidating budgets. Important Spain and Portugal step up deficit cutting measures
  • German academic says considers appealing global emergency aid package
  • Germany’s Bundesbank says euro zone central banks have started buying government bonds
  • China central bank: Does not rule out possibility of sovereign debt risks spreading globally
  • China’s Wen: Should not underestimate the complexity of global financial crisis.
  • UK Conservatives say further progress made in talks with Lib Dems
  • Bank of England announces no increase in rates, no increase in QE, as expected
  • German March trade surplus s.a 13.3 bln vs 12.1 bln in February, not far removed from median forecast of 14.0 bln
  • Bank of France see French Q2 GDP rising 0.5% (first estimate)
  • Bank of France industry sentiment index falls to 102 in April from revised 104 in March (prev 103)
  • French March industry output +1.0 m/m, stronger than median forecast of +0.3%
  • Euro zone sentix index falls to -6.4 in May from 2.5 in April

The financial assistance package, put together by global authorities to stop Greek-induced contagion spreading, has certainly improved sentiment. European stocks have made hefty gains (FTSE and DAX up around 5%, Portugal’s PSI 20 up around 10%), oil up around 3 bucks, while cost of euro zone debt insurance just got a heck of alot cheaper etc etc.

EUR/USD up 1.2990 from early 1.2945, but some way from session high 1.3093 it has to be said, reflecing fact that there are still a fair few sceptics out there. Number of ACB’s were seen buying early. UK clearer also noted and helped lift pairing over 1.3000 tripping stops. Swiss private bank entered the fray buying aggressively and we got as high as 1.3093. Talk of 1.3100 barrier option interest and protective selling just ahead of said level managed to cap rally.

News that German academic says he’s considering appealing against the global emergency aid package through the German courts deflated things a bit and cautious comments from Chinese central bank didn’t help either.

Cable up at 1.5020 from early 1.4895. Underpinned by improvement in general risk appetite and hope Conservatives and Lib Dems close to agreeement on coalition government.

EUR/GBP started around .8690 and rallied strongly in early trade reaching session high .8759 where it was duly smashed lower by heavy selling from Swiss names and we’re presently down at .8645. The EUR/GBP sell-off helped underpin sterling in late morning trade. Stops now seen through 1.5030.

USD/JPY up at 93.30 from early 92.60 as EUR/JPY rallied strongly against backdrop of improved risk appetite. Cross presently at 121.20 from early 119.90.