• EU’s Almunia says Eurogroup will discuss euro appreciation to prepare position for G7
  • German August retail sales -1.5% m/m, -2.6% y/y, much weaker than median forecasts of +0.2%, -0.8% respectively
  • BOE Miles: Difficult to predict sterling’s path and cannot easily be affected through policy
  • IMF sees global economy contracting -1.1% in 2009, revised upward from July projection of -1.4%. Sees 2010 growth of +3.1%, up from July’s +2.5%. Global recession ending but warns recovery will be subdued. Premature withdrawal of stimulus is greatest risk in near term
  • IMF economist: Hard to see how global rebalancing adjustment can happen at current exchange rates
  • Swiss September PMI 54.3, better than median forecast of 51.0
  • Italy September manufacturing PMI 47.6, up from 44.2 in August and better than median forecast of 45.2
  • French September factory PMI (final) 53.0, up from flash 52.5, 19-month high
  • German September manufacturing PMI (final) 49.6, , unchanged from flash estimate
  • Markit September Euro zone manufacturing PMI (final) 49.3, up from flash 49.0
  • UK September manufacturing PMI 49.5, down from 49.7 in August and worse than median forecast of 50.2
  • UK construction orders fell 4% in 3-months to August compared to previous 3 months, down 9% from year ago
  • Euro zone August unemployment rises to 9.6% from 9.5% in July, in line with median forecast. Highest rate since March 1999
  • Trichet: Excess forex moves have adverse implications

Not a very good morning for the euro. EUR/USD having started out around 1.4620 is presently down around 1.4565 with a session low 1.4552 posted.

The rot set in early. With EU finance ministers and central bank governors meeting in Gothenberg, EU’s Almunia came out and said that the euro’s appreciation was going to be discussed to prepare a position for forthcoming G7 conflab.

This was quickly followed by really dismal German retail sales data (see above) and we quickly got down to 1.4552. There was much talk of buy orders lined up at 1.4550 and this lent much-needed support. Sources also noted that a large custodial bank stepped in buying aggressively from around the low all the way back up to 1.4600.

However the rally was shortlived and we were soon drifiting lower again. Suffice it to say the market is very nervy re EU’s stance on recent euro strength.

Sterling has had an Ok morning, cable presently up at 1.5980 from an early 1.5955, while EUR/GBP is down at .9105 from an early .9160.

Talk of National Australia Bank buying sterling/selling aussie tied to it’s possible purchase of Legal & General lent sterling some much-needed support. There is also growing speculation Kraft is readying it’s war chest to make an aggressive move for Cadbury, which would bring with it the possibility of positive cable flows.

USD/JPY sits at 89.95, effectively unchanged on the day. Talk of layered buy orders at 89.50 down through 89.00, while on topside, layered sell orders at 90.50 up through 91.00. Also talk of buy stops just north of 90.30.

AUD/USD lower, presently at .8775 from early .8810. Not helped by talk of aforementioned NAB sales