• Shanghai share index up 0.5%, highest close in nearly 3-months
  • New record for gold $1095.05
  • Italy October services PMI 52.2, up from 48.5 in September, better than median forecast of 49.3, returns to growth (over 50.0) for first time in 22 months
  • Euro zone October services PMI revised up to 52.6 from flash 52.3, 22 month high
  • UK October services PMI 56.9, up from 55.3 in September, better than median forecast of 55.5, highest since August 2007
  • Japan ex-MOF Watanabe: Expects yen to move around 90-95 vs dollar in coming half year. No other currency than dollar can play role of world reserve currency
  • Euro zone September PPI -0.4% m/m, -7.7% y/y, as expected
  • UK Govt source: FX always an issue, but not to be formally discussed at G20 meeting
  • Fitch lowers Ireland’s sovereign debt rating to AA- from AA+; outlook stable

Risk appetite in fairly good shape today, European stockmarkets doing nicely, FTSE 100 up close to 1%, DAX 30 up close to 1.5%. Oil meanwhile up around half a buck.

EUR/USD started around 1.4730 and rallied early. Asian sovereign purchases were noticed initally around 1.4740. A hedge fund stepped in selling around 1.4760 which caused the rally to stall, but it was short-lived as a very brief dip saw renewed ACB interest which brought about a move to a 1.4773 session high.

EUR/USD had slipped off the highs when news that Fitch had downgraded Ireland’s sovereign debt rating (see above) caused another brief dip, but that again was quickly met by renewed buying and we’re presently at 1.4765.

Talk of mixture of sell orders/stops now congregated up at 1.4775/80.

Cable set off at a gallop, moving quickly from around 1.6430 to test sell orders just ahead of psychological 1.6500 line. These batted back the pairing a couple of times initally, but eventually decent buying from a UK clearer helped breach said level.

However we had slipped back to around 1.6495 just ahead of the release of services PMI data (see above), but the appreciably better than expected data sent cable on a surge. It moved from 1.6495 to 1.6520 in the blink of an eye before stalling slightly.

The stall was temporary though and we eventually posted a session high 1.6445, where an ACB stepped in and sold good amounts and that’s capped things for the time being. The sovereign is said to have been the same one recently buying below 1.6300. Nice tidy profit.

USD/JPY has made ground as the JPY saw across the board weakness against the background of improving risk appetite. We moved from an early 90.30 all the way up to a session high 91.03 before settling back slightly, presently at 90.85. Sell orders now noted at 91.30 up through 91.60.

AUD/USD has firmed against the improving risk backdrop, presently at .9075 from an early .9025. We’ve been as high as .9088 where the pairing ran into BIS selling interest.