• BOE’s Fisher: Feels more confident QE having the scale and speed of impact that the Bank would have hoped for when they started asset purchases
  • Talk Sainsbury’s have accepted 420p a share bid from Qatari Fund (unconfirmed)
  • Japan FinMin Fujii: Never said strong yen is good for economy. Task is to stabilise value of currency
  • European September new car sales up 6.3% – ACEA
  • Shanghai share index up 0.3%
  • ECB’s Liikanen: Bottom of downturn reached
  • ECB’s Sramko: Risks of deflation in euro zone lower than in Q-2. Sees euro zone inflation at 1.2% in 2010
  • Euro zone September inflation flat m/m, -0.3% y/y
  • European institutes confirm German economy to shrink -5.0% in 2009, grow +1.2% in 2010. Credit conditions in Germany likely to deteriorate in 2010. Govt should make more capital requirements of banks to avoid credit crisis. ECB should cut rates to 0.5%

Busy busy morning. Main feature without doubt the comeback of sterling. Cable up 2 1/2 cents at one stage, going from around 1.6050 to within a hairs breath of 1.6300 (1.6298 session high). EUR/GBP is down at .9155 from an early .9310, GBP/JPY up at 146.75 from around 143.60.

A UK clearer was reported slamming EUR/GBP at the European opening and it all kicked off from there. Fundamentally focus was on the interview Paul Fisher gave the FT (see above) Some saw in the official’s comments reason to believe the BOE would pause their asset purchase programme. Some even thought his comments might even signal QE was coming to a close. Personally read interview twice and thought Fisher played his cards close to his chest. And at the end of the day he’s only one member. But today wasn’t the day to sit and dwell on if’s buts maybes, the demand for sterling being so strong.

Stops were triggered all the way up in cable. It looked as though we might have topped out at 1.6225, with reports of an Asian central bank and Middle Eastern names selling good amounts between 1.6200 and 1.6225.

It wasn’t to be however as rumours circulated that Sainsbury’s had accepted a 420p bid from the Qatari Fund. That had the market salivating at the prospect of hefty positive M&A flows and we steamrollered up to the session high 1.6298 before settling back to 1.6250 at writing. Crazy!!!

EUR/USD has lost ground. Talk of sell orders lined up at 1.4970 up through to 1.5000 barrier options didn’t help and then the avalanche of EUR/GBP selling progressively weighed on the pairing. We started around 1.4950, went as high as 1.4969 and are presently down at 1.4880.

USD/JPY has made ground, presently up at 90.15 from an early 89.45, having been as high as 90.31. Japanese FinMin Fujii helped underpin the pairing, saying he never said strong yen good for economy. It’s also the 15th a Gotobi day which lent support. Sources reported that a US investment bank was a notable buyer of the pairing throughout the morning.