- Reuters poll of 26 economists: Slim majority expect China to raise interest rates before end of year. Poll taken over past 3 days.
- Moody’s maintains negative outlook for Spanish banks
- Luxembourg ForMin Asselborn: We have a euro crisis and must deal with it jointly
- German govt spokesman: Chancellor is convinced must act now to ensure stable euro
- Banks putting economic recovery at risk – Bank of England warns
Not a good start to the week for sterling. Cable down at 1.5755 from early 1.5790 having been as low as 1.5721. EUR/GBP up at .8417 from early .8358, having been as high as .8425. GBP/JPY down at 132.30 from early 132.75.
Warning from the Old Lady, that banks are putting economic recovery at risk by restricting access to credit, won’t have helped matters. But a fair amount of the weakness is probably down to a good-sized buy order going through in EUR/GBP.
Talk is a large US custodial bank has been executing the order, apparently related to FDI (foreign direct investment.) Details somewhat nebulous.
Major Swiss commerical bank was seen selling cable early and stops were tripped through 1.5740 on way to session low 1.5721. Talk of more stops through 1.5720. As US treasury yields came off their best levels, so the dollar came under some across the board pressure lending cable much-needed support.
EUR/USD up at 1.3265 from early 1.3195. Talk had Asian sovereign buy orders down at 1.3170/80 and decent sell orders at 1.3220/30 and these parameters proved durable for a large part of the morning session. Finally with US treasury yields coming lower EUR/USD took off.
Stops were tripped through 1.3240 on way to session high 1.3278.
USD/JPY is little changed on day, presently at 84.00. Hedge fund buying was noticeable early and we got as high as 84.36. An Asian sovereign came in selling above 84.30 and as US treasury yields came off so the pairing slipped back.