Things have ticked over nicely this morning. Something of a game of two halves I’d have to say. European stocks started the session under pressure before recovering as the risk switch was flicked to on.

EUR/USD started around 1.2215 and came under pressure early as lower European stocks and comments from RBA/BOJ officials (see above) helped undermine. We posted session low 1.2167 before reports circulated of decent bids emerging at 1.2165/70. The BIS and a US custodial were notable buyers down around the lows.

Much worse than expected ZEW German data (see above) caused the EUR/USD recovery to stall, but it is was only temporary, optimistic comments from DIHK regarding the German economy helping neutralise. Then comments from DIHK and ZEW economist regarding euro/dollar hit the wires at same time (see above) and we were off to the races. The BIS was reported buying again above 1.2200 along with Bk of Korea and a large French bank (possibly agent for China interest.)

That took us up to 1.2276 session high so far, presently back at 1.2255. Sell orders noted 1.2270 through 1.2285 with talk of 1.2300 barrier interest. Stops seen gathering just above 1.2300.

Cable sits at 1.4725, slightly lower from early 1.4755. Weaker than expected inflation data (lessening perceived chance of early rate hike) and Fitch downgrade of BP (see above) have weighed somewhat. EUR/GBP up at .8320 from early .8280.

USD/JPY at 91.40 hardly changed, narrow rangebound.