• German April trade surplus s.a. 13.1 bln vs 13.0 bln in March, worse than median forecast of 14.0 bln. Exports -5.9% m/m, imports -7.3% m/m
  • EU’s Rehn: Essential that beyond 2011 all EU countries meet their medium-term budget targets. Will assess whether France, Italy have taken effective action on finances shortly
  • Bank of France industry sentiment index falls to 101 in May vs 102 in April. Median forecast had called for unchanged 102. BOF maintains Q2 GDP forecast at 0.5%
  • French April trade deficit -4.248 bln, pretty much in line with median forecast of -4.20 bln
  • Polish FinMin: Confident Hungarian government will take all measures necessary to tackle deficit. Sees no risk of contagion from Hungarian financial problems
  • Swiss May CPI -0.1% m/m, +1.1% y/y, slightly weaker than median forecasts of +0.1%, +1.2% respectively
  • Japanese PM Kan: Reason Japan’s fiscal state worsened is because it couldn’t raise taxes. In general sense, know weak yen is positive for Japan’s exports, economy
  • Fitch: UK fiscal challenge is formidable and warrants a strong medium term consolidation strategy, including a faster pace of deficit reduction than set out in the April 2010 budget
  • UK Treasury: Government committed to significantly accelerating cuts in structural deficit
  • Swiss foreign currency reserves rise to 232.4 bln in May from 153.6 bln in April, reflecting massive currency interventions by SNB
  • German April industry output +0.9% m/m versus median forecast of +0.8%. EconMin: Momentum in industrial orders indicates a further recovery in industrial production

For awhile there thought we were in for one of the most boring sessions in a long long time. But after an extremely slow start things blossomed into what was a fairly interesting session. Not sure exactly what triggered the burst of activity, maybe sharp sell-off in EUR/CHF or maybe turnaround in European stocks.

EUR/USD started around 1.1960 and did very little in early trade. Then as European stocks slipped into the red and as EUR/CHF came under accelerated pressure, so EUR/USD came under increasing pressure. We got as low as 1.1901, presently back at 1.1940.

Talk of decent asian buy interest down at 1.1880/90. Talk of 1.1850 barrier option interest. Sell orders still noted up at 1.1990/00, stops through 1.2010. Decent-sized 1.1900, 11950, 1.2000 option expiries at today’s New York cut.

Cable down at 1.4430 from early 1.4505. Cable came under pressure as European stocks sold off and took out buy orders at 1.4450/60 without any problem, triggering stops through 1.4445 on way to session low 1.4373. Comments from Fitch rating agency re UK deficit (see above) certainly didn’t help matters.

Later comments from the UK Treasury (see above) lent some subsequent support.

USD/JPY little changed at 91.55, trading confined to narrow range. Stops noted through 91.20.

EUR/CHF down at 1.3820 from early 1.3885 having been as low as 1.3787. Talk of SNB buying below 1.3800 has lent some tenuous support. Also talk of large Swiss commercial bank buying cross around lows, thought to be booking some profit on sizeable short possies.