• Japan not complacent about results so far from forex intervention. Will need to act appropriately as needed on forex intervention – JIJI quotes MOF source
  • China says “pressure” will not solve yuan problem, may have opposite effect
  • UK August retail sales -0.5% m/m, +0.4% y/y, much weaker than median forecasts +0.3%, +2.0% respectively
  • Spain sells 2733 mln of 10-year bond, 1276 mln of 30-year bond
  • Euro zone July trade balance +6.7 bln. Much stronger than median forecast of +1.5 bln

Good morning for euro, which has seen across the board gains.

EUR/USD up at 1.3085 from early 1.2995, having been as high as 1.3109. EUR/JPY up at 112.05 from early 110.85; EUR/GBP up at .8375 from early .8325 and EUR/CHF up at 1.3105 from early 1.3010.

Middle Eastern EUR/USD buying noticeable right from the get go. Sell orders up at 1.3035/50 were well reported and they provided temporary barrier to upside.

But a successful Spanish bond auction; strong buying of EUR/GBP cross in wake of very poor UK retail sales data; strong buying of EUR/JPY as BOJ aagain intervened in USD/JPY; strong buying of EUR/CHF ahead of SNB rate decision and much better than expected euro zone July trade data proved a powerful combination and EUR/USD headed higher.

Stops tripped above 1.3050 taking us to session high 1.3109. Middle Eastern names turned up as aggressive sellers above 1.3100 as they took profits.

USD/JPY up at 85.70 from early 85.30. We heard early murmourings BOJ had been seen on the bid down at 85.20, and they proved to be on the money as reports eventually surfaced that the Japanese central bank was chasing the pairing higher. Real money was also noted on the buy side.

Cable at 1.5620 from early 1.5605. Pairing rallied early running into selling from likes of Russia, BIS and well known US investment bank. But the pairing was holding up well, that’s until the release of much worse than expected UK retail sales data.

The paring plunged from above 1.5600 to session low 1.5540. The US invesmtent bank who had earlier sold above 1.5600 was then notable buyer along with the Big German. We went back to 1.5600 almost as quickly as we’d fallen.