• UK May CPI +0.2% m/m, +4.5% y/y, inline with median, matches April’s 2 ½ year high
  • ECB’s Noyer: We must absolutely avoid anything that leads to declaration of default in Greece, debt in default cannot be accepted as collateral by the ECB
  • ECB’s Noyer: All developed countries, not just Europe, have seen 30% rise in debt since crisis
  • French April current account balance -4.8 bln, vs unrevised -4.1 bln in March
  • Swiss govt maintains 2011 GDP growth forecast at 2.1% (March forecast 2.1%)
  • Greek 10 year govt bond yield hits fresh euro lifetime high at 17.51%
  • CHINA: Central Bank says EU sovereign debt crisis could spread and worsen
  • China raises banks’ required reserves by 50 bps
  • ECB’s Nowotny: Unified action on Greece sensible, but may differ from original Vienna initiative.
  • IMF says doesn’t see imminent danger that Austria could lose triple A debt rating

EUR/USD followed on from Asia with a firming tone, barring a small hiccup early on rumours of an imminent Belgium downgrade (unfounded). EUR/JPY buyers helped push euro through stops at 1.4450 before an Asian sovereign then stretched the move to 1.4472. Russian and semi-official sales later helped turn euro back to 1.4435.

GBP/USD tracked the euro higher, but stalled into offers ahead of 1.6450 on a combination of a EUR/GBP bounce to 0.8826 and expectations of a weaker CPI. Cable slipped back under 1.6400, but bounced on the release of as expected CPI.

Asian sovereign sales have been noted above 1.6400 slowing rally attempts.

AUD/USD held firm in Europe and took out stops through 1.0660 to a high of 1.0669, before easing back to 1.6040/50. Strong bids are now reported in the 1.0620’s.

USD/JPY traded a typical 80.13-45 range with bids in wait 80.05/10 and 79.90/95 (larger). Offers are now capping the dollar at 80.45/50. EUR/JPY and AUD/JPY were the drivers behind the moves to the USD/JPY high.

Gold built higher to $1524.10 before the Chinese raised the reserve ratio requirement for commercial banks by 50 bps which send the metal back to $1517.10.

WTI July Crude also got kicked back from highs of $97.78 to $97.00 following the announcement.