• UK election finishes with no party winning overall majority. But speculation rife that Conservatives/Lib Dems going to form coalition government. David Cameron to make eagerly awaited statement at 13:30 GMT
  • Lib Dem leader Clegg: Party with most votes should govern, that’s Conservatives. Comments heighten speculation Conservatives/Lib Dems will form coalition. Cable/sterling bounced back sharply on comments
  • Rumour central banks will open up swap lines again
  • German Bundestag Lower House of Parliament approves Greece aid package
  • Swiss adj April jobless rate 4.0% vs median forecast 4.1%
  • Swiss EconMin: SNB intervention important for now, not strategy for long-term
  • China’s overly fast property price rises could lead to social instability – Housing Ministry
  • German FinMin: Must defend common European currency
  • German March industry output +4.0% m/m, much stronger than median forecast +1.4%

Its been a morning full of rumour, speculation and choppy price action.

Cable started around 1.4875. Early European traders didn’t hesistate and smashed cable and sterling in general right from the get go. Markets don’t like uncertainty and with a hung parliament the outcome of the UK election things were always likely to be messy.

Cable fell steadily and reached session low of 1.4478. Then Lib Dem leader Clegg came out before the cameras and made comments which suggest to many political pundits that Conservatives/Lib Dems are going to forge a coalition government. Nothing concrete yet though, but speculation was enough to drive sterling recovery. Cable presently back up at 1.4685.

EUR/USD started around 1.2710 and fell early back below 1.2700, underminned by slumping European stockmarkets. However recovery came quickly with BIS notable buyer around 1.2680. A number of rumours also circulated. Talk was that ECB holding special conference call with 47 EU banks to discuss money markets, but it soon became clear that it was the Market Contract Group having a chat and not unusual.

Then talk circulated that ECB had been buying EUR/JPY, but this was never confirmed. Probably best to label that one under “spurious”

Sources reported that US investment bank (yes the one in the news) had come in trying to buy around a yard of euros and that seemed to be main driving force.

Later yet another rumour circulated that central banks readying to open up swap lines between each other again, and this helped improve general risk sentiment. Bundestag Lower House of Parliament approving Greek aid package and much stronger than expected German industry output data were also supportive.

Sell orders at 1.2790/00 have been well noted. Talk also that stops gathering up in 1.2820/25 area. Said to be of decent size.