• Irish/German 10 year bond yield spread hits euro lifetime high of 443 bps.
  • Irish 5-year cds at 500 bps, up hefty 40 bps on day
  • EU’s Rehn says there will be no restructuring of Greek, Irish or any other euro country debt
  • Talk European central banks buying Irish bonds
  • Irish FinMin: No plans to bring forward budget date
  • German September flash manufacturing PMI 55.3, down sharply from 58.2 in August and demonstrably weaker than median forecast 57.6. Services PMI 54.6, down from 57.2 in August and demonstrably weaker than median forecast of 57.0.
  • Euro zone September flash manufacturing PMI 53.6, down from 55.1 in August and below median forecast of 54.5. Services PMI 53.6 as well, down from 55.9 in August and below median forecast of 55.5
  • UK mortgage approvals for home purchase 31,767 in August, down from 34,219 in July. Well below median forecast of 33,698
  • German finance agency says cuts Q4 debt issuance to 60 bln euros from originally planned 89 bln. Cutting issuance due to favourable budget developments, situation in financial markets
  • Greek FinMin: Hopeful GDP in 2010 can be better than minus 4%
  • Dutch final Q2 GDP revised up to 1.0% q/q, 2.2% y/y from previous 0.9%, 2.1%

Bad morning for the euro which has seen across the board slippage. The single currency has been underminned by increased concerns surrounding finances of PIIGS, especially Ireland, and to a lesser extent by very poor european PMI data.

EUR/USD down at 1.3325 from early 1.3390 having been as low as 1.3309 so far. Initially the pairing peeped over 1.3400 but selling by an Asian sovereign helped push it back below.

The BIS was seen buying at 1.3390 but this ellicited no bounce whatsoever, which probably foretold what was to come. As the bond yield spreads between likes of Ireland/Portugal and Germany widened, and as the weaker than expected PMI data was released, so EUR/USD drifted lower.

Asian buy orders were reported around 1.3350 and they lent some short-term support. Korea and Russia were notable buyers around said level. But eventually stops just below were tripped and we were headed lower again amid reports of leveraged accounts selling heavily.

A US investment bank then helped trip further stops through 1.3335 and we got to 1.3309 before recovery. BIS was reported to be buying again around the lows.

Cable up a little on the day at 1.5675 from early 1.5650. The pairing did come under some fairly heavy pressure as BIS sold around 1.5660 and very weak UK mortgage approval data heightened worries about the UK housing market.

We got as low as 1.5613 before a very solid rebound. The rally came in no small part because of heavy selling of the EUR/GBP cross. Obviously the euro has had a bad morning but there was also much talk of a very large EUR/GBP sell order to be done next week.

The cross is down at .8500 from early .8555 having been as low as .8482 at one stage.

USD/JPY very marginally lower in quiet trade, presently at 84.45 from early 84.60.