- Merkel: I am certain that by the EU summit on Oct 23 we will have full approval of EFSF
- Trichet: July 21 deal and commitments made by Greece should mean it can avoid default
- Outgoing Slovak govt leaders to meet opposition SMER party Wednesday. Slovak parliament may hold new vote on EFSF expansion as soon as Thursday if agreement with opposition is reached – Spokesman
- Euro zone August industrial production +1.2% m/m, +5.3% y/y, demonstrably stronger than Reuters’ median forecasts of -0.7%, +2.2% respectively
- UK September jobless claims +17.5k, better than median forecast +25k. However Ilo unemployment jumped by 114k in 3 months to August to 2.57 mln, highest total since October 1994. Unemployment rate ticked up to 8.1%, worse than expected 8.0% and highest read since October 1996
- UK PM Cameron: Unemployment figures are “very disappointing”
- French September EU-harmonised CPI flat m/m, +2.4% y/y, weaker than Reuters’ median forecasts of +0.3%, +2.6% respectively
- BOE’s Dale: MPC voted for more QE mainly because UK economy slowed in Q3 and is expected to slow further in Q4
- ECB’s Nowotny: One need not have any fear of inflation in euro zone – MNSI
- German EconMin: It is clear that growth forecasts from May will probably have to be revised downwardly
- EU’s Rehn: Ireland’s budget deficit in 2011 will be well below the ceiling of 10.5% of GDP. Ireland is on its’ way to an export-led recovery
- China’s debt spree returns to haunt – AEP at The Telegraph
Risk on this morning; European stocks have seen decent gains, gold up, oil up (albeit smallish) and US yields firmer etc etc.
EUR/USD up at 1.3775 from early 1.3615, having been as high as 1.3815 in very active trade. Comments from Merkel and Trichet (see above) helped get the ball rolling. US investment house, large hedge fund, CTAs were some of the notable early buyers.
Barrier option interest was well documented at 1.3700 and it gave way fairly tamely. Stops gathered just above were tripped and we accelerated quickly higher. All the time reports were coming in of ongoing hedge fund demand (plural by now).
ACB selling was noted north of 1.3750 and BIS slightly higher, but we still managed to take out barrier option interest at 1.3800 and get to 1.3815 session high before falling back. Crazy stuff.
More buy stops now seen lined up through 1.3825.
AUD/USD has rallied very strongly as well, up at 1.0120 from early .9915, having been as high as 1.0140. China was a very notable early buyer of the pairing, the aussie benefitting from the risk on backdrop.
Cable up at 1.5765 from early 1.5570, managing to shrug off a real crappy UK jobs report (see above). EUR/GBP little changed at .8740 having slipped back from an early rally which saw us get as high as .8786.
Talk of decent-sized buy stops now gathered just above .8800.
USD/JPY unchanged at 76.67. Recovered from early dip to 76.30. Guess the higher US treasury yields and general risk on backdrop will have lent support. Still the most boring pairing in the universe though.