• UK’s Osborne: BOE can deploy monetary tools to support economy
  • BOE’s Dale: Important MPC remains alert, ready to change direction as circumstances change
  • BOE’s Miles: Monetary policy has been extraordinarily expansionary, still have this weapon if needed
  • German EconMin: Forex rates must reflect economic fundamentals, this also true for dollar and yuan
  • Euro zone October composite PMI 53.4, down from 54.1 in September and slightly below median forecast of 53.6
  • UK September retail sales -0.2% m/m, +0.5% y/y. Weaker than median forecast of +0.4, +1.0% respectively
  • UK September mortgage approvals by major bank lenders 44,000, in line with median forecast, but lowest since April 2009
  • Swiss October ZEW investor sentiment -27.5 from -5 in September
  • China Central Bank chief: China faces risks from inflation and asset bubbles
  • BOJ Gov Shirakawa: Very carefully watching yen rise impact on Japan economy

EUR/USD up at 1.4025 from early 1.3920 having been as high as 1.4050. EUR/JPY up at 113.70 from early 113.00.

EUR/USD rallied early amid talk of Asian sovereign names buying, presumeably for reserve diversification purposes. UK clearers also notable among the buyers. There was a slight pause on the back of weaker than expected French PMI data, but it wasn’t much.

German PMI then came out very strong and EUR/USD extended it’s rally. We were sitting around 1.3980/85 when the pairing spiked dramatically over 1.4000 and hit a session high 1.4050 very quickly. The move seemed to coincide with comments from German EconMin about forex rates having to reflect economic fundamentals. It was one of those moves where you could probably ask three traders what happened and get three different answers.

Asian sovereign strong seller in 1.4040/50 area and was seen still selling at lower levels. BIS has also been selling above 1.4020. I have a feeling, but have no confirmation, that the Asian sovereign seller has been China.

USD/JPY sits at 81.05 from early 81.20, once again seeing very quiet trade. Stops seen through 80.70 before 80.50 and 80.00 barrier interest. Sell orders seen clustered up around 82.00.

Cable slightly easier on the day, down at 1.5775 from early 1.5795. Speculation Bank of England will move to introduce more QE in near future is weighing on sterling. Poor retail sales/mortgage approval data (see above) didn’t help either.

Reserve Bank of India seen buying cable below 1.5750, lending much-needed support.

EUR/GBP up at .8890 from early .8810, having been as high as .8902. Large US custody bank decent seller around the highs. Buy stops now noted through .8910.

AUD/USD up at .9870 from early .9830 and USD/CAD down at 1.0180 from around 1.0240 in line with generally weaker dollar tone.